/raid1/www/Hosts/bankrupt/TCR_Public/081031.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, October 31, 2008, Vol. 12, No. 260
Headlines
ABSC TRUST: Moody's Cuts Ratings on 164 Tranches from 17 RMBS
ACUSPHERE INC: Trades on Alternative Listing Until December 31
ALLTELL CORP: Moody's Keeps Ratings Under Review for Possible Cuts
AMERICAN MEDIA: Extends $570MM Offering of Senior Sub. Notes
AMERICREDIT CORP: S&P Places 'BB-' Credit Rating Under Neg. Watch
ARBY'S RESTAURANT: Moody's Trims Ratings on Weaker Performance
ASYST TECH: Non-Compliant with Fin. Covenants, Negotiates Waiver
AVIS BUDGET: Fitch Cuts Ratings on Senior Debt; Negative Watch
AXCESS INTERNATIONAL: Plans Preferred Stock Issue to Raise Cash
BEARINGPOINT INC: To Ask Shareholders' OK on Reverse Stock Split
BOSCOV'S INC: Taps Klehr Harrions as Special Real Estate Counsel
BOSCOV'S INC: Taps Quinn Emanuel as Conflicts Counsel
BOSCOV'S INC: Court Moves All Assets' Sale Hearing to Nov. 5
BRIAN TUTTLE: Sec. 341 Meeting of Creditors Slated for Nov. 20
BROOKSIDE TECHNOLOGY: Names Chris Phillips to Board of Directors
BUFFETS HOLDINGS: Files Plan of Reorganization
CASTLE HILL: Fitch Cuts Rating on $26.5MM Class C-1 Notes to 'CCC'
CHRYSLER LLC: Half of Assembly Lines Could Close in GM Merger
CMT AMERICA: Court Converts Case to Chapter 7 Liquidation
COBALT CMBS: Fitch Cuts Rating on Six Certs. Classes to Low-B
COMM 2004-LNB3: Moody's Lowers Ratings on Four Certificate Classes
COMMUNICATION INTELLIGENCE: Post $755K Net Loss for September 2008
CONSTAR INT'L: Has Until March 2009 to Regain Value Threshold
CREDIT SUISSE: Fitch Cuts Ratings on Nine Certificate Classes
CREDIT SUISSE: Moody's Junks Rating on $2.295MM Class N Certs.
DELUXE ENT: S&P Trims Ratings to 'B-' on Likely Covenant Breach
DENNY'S CORPORATION Sept. 24 Balance Sheet Upside-Down by $160Mln
DLJ COMMERCIAL: Fitch Takes Rating Actions on Various Certificates
DOUGLAS JOHNSON: Wants Schedules Filing Extended to December 1
EDUCATION RESOURCES: Excl. Period Extension Hearing on Nov. 18
ELECTRICAL COMPONENTS: Moody's Confirms 'Caa2' C and PD Ratings
EMISPHERE TECH: Has Until November 20 to Comply with NASDAQ Rule
ESTATE FINANCIAL: U.S. Trustee Appoints 7-Member Creditors Panel
ESTATE FINANCIAL: Files Schedules of Assets and Liabilities
ESTATE MORTGAGE: Files Schedules of Assets and Liabilities
FANNIE MAE: Will Write Off Almost $20.6BB in Tax Credits
FITNESS HOLDINGS: Gets Interim Permission to Use PWB Collateral
FITNESS HOLDINGS: To Shutter 19 Outlets, Eyes Going Concern Sale
FORD MOTOR: K. Kerkorian Had 4.98% Equity Stake as of July 29
FREDDIE MAC: Reconsidering Terms Offered in Buying & Backing Loans
GENERAL GROWTH: Constrained Liquidity Cues Moody's Ratings Cut
GENERAL MOTORS: Some Merger Issues Solved; Financing Woe Remains
GENERAL MOTORS: Merger Could Mean Major Plant Closures & Layoffs
GENERAL MOTORS: S&P Keeps 'B-' Credit Ratings Under Negative Watch
GMAC COMMERCIAL: Fitch Holds 'B+' Cert. Rating; On Stable Outlook
GMACM HOME: Worsening Performance Cues Moody's To Cut Certs. Rtngs
GS MORTGAGE: Fitch Affirms $18.9MM Class Q Loan Rating at 'B-'
GWLS HOLDINGS: Ct. Sets Nov. 7 Hearing on Proposed Bid Procedures
GWLS HOLDINGS: May Employ Kurtzman Carson as Claims Agent
GWLS HOLDINGS: May Obtain Interim DIP Financing of up to $45MM
HANOVER CAPITAL: Amends Merger Agreement with JWH Holding
HCA INC: Amends Restoration Plan to Exclude SERP Executives
HCA INC: Inks Amended Employment Deal with Ex-CEO Bovender
HCA INC: Restates Supplemental Executive Retirement Plan
HCA INC: William Frist to Replace Thomas Frist as Director
HC INNOVATIONS: Robert Walker Discloses Option to Buy 1MM Shares
HEALTHMARKETS INC: S&P Cuts Counterparty Credit Rating to 'BB-'
HEXION SPECIALTY: Files Suit v Banks Over Merger Funding Breach
HIGHLAND LEGACY: Moody's Cuts $30MM Notes Ratings to B3 from Ba3
HOME EQUITY: Moody's Junks Ratings on Two Classes of Certificate
INDYMAC RESIDENTIAL: Moody's Reviews 14 Ratings for Likely Cut
INPHONIC INC: Court Confirms 2nd Amended Joint Plan of Liquidation
INVISTA BV: Moody's Affirms Corporate Family Rating at 'Ba2'
ISCO INTERNATIONAL: Cuts Jobs at Clarity Communications Unit
JBS USA: Moody's Withdraws 'Ba3' Rating on Term Loan Suspension
JONES APPAREL: Weak Operating Results Cue S&P to Cut Rtngs to BB-
JP MORGAN: Moody's Cuts $34MM Class H Certificates Rating to 'Ba1'
JP MORGAN: Moody's Holds Low-B Ratings on Six Certificate Classes
KIRK PIGFORD: Ct. Okays Private Sale of Avalon West for $411,825
LAND RESOURCE: Blames Liquidity Crisis for Chapter 11 Bankruptcy
LAND RESOURCE: Case Summary & 30 Largest Unsecured Creditors
LEHMAN BROTHERS: DTCC Closes Out Over $500 Billion in Debt
LITTLEFIELD TEXAS: Stable Fund Prompts Fitch to Upgrade Rating
LOCAL TV: Moody's Cuts CF and PD Ratings to 'Caa1' from 'B2'
LUMINENT MORTGAGE: Taps Provtiviti as Financial Advisor
LUMINENT MORTGAGE: Files Operating Report for September
LYNX 2002-1: S&P Holds 'CCC-' Rating on Class D Notes
MARCAL PAPER: Court Approves 3rd Amended Disclosure Statement
MCDONALD TECHNOLOGIES: Moody's Withdraws Ratings for Biz. Reasons
MEDICAL SOLUTIONS: Vicis Capital Discloses 82.6% Equity Stake
MERITAGE HOMES: Posts $144 Million Net Loss for Third Quarter 2008
MERVYN'S LLC: GOB Sale Begins November 1; Panel Withdraws Protest
MGM MIRAGE: Moody's Cuts Ratings; Keeps All Ratings Under Review
MGM MIRAGE: S&P Assigns 'BB' Issue-Level Rating on $1 Bil. Notes
MICRO-HEAT INC: Lender Consents to Use of Cash Collateral
ML-CFC COMMERCIAL: Fitch Cuts $5.5MM Class N Certs. Rating to B-
ML-CFC COMMERCIAL: Fitch Cuts Ratings on Seven Class Certificates
MORGAN STANLEY: Stable Performance Cues Fitch to Affirm Ratings
MRS FIELDS: SEC Deregisters Two Senior Secured Notes
NELNET INC: Moody's Trims Senior Unsecured Rating to Ba1 from Baa2
NEW CENTURY: Moody's Trims Ratings on 59 Tranches from Nine RMBS
NEXIA HOLDINGS: Issues 500MM Common Stock Shares to Richard Surber
NEXTMEDIA OPERATING: S&P Affirms Corporate Credit Ratings at 'B-'
NOMURA: Moody's Chips Rtngs on 107 Tranches from 10 Subprime RMBS
OFFICE DEPOT: Moody's Reviews 'Ba1' CF & PD Ratings for Likely Cut
OWNIT: Moody's Cuts Ratings on 87 Tranches from Nine Subprime RMBS
PAUL REINHART: Gets Interim Ok to Hire Grant Thornton as Adviser
PHYSICIANS MEDICAL: Schedules Filing Deadline Moved to Nov. 7
POPULAR ABS: Moody's Cuts Ratings on 84 Tranches from 13 RMBS
PREMIUMLOAN TRUST: S&P Puts 'BB' Notes Ratings Under Neg. Watch
PRIMEDIA INC: To Release Third Quarter Results November 8
PRO-ACTIVE COMM: Hearing at Bankruptcy Court Set for November
PSI CORP: July 31 Balance Sheet Upside-down by $3.3 Million
RALI: Moody's Cuts Ratings on 121 Tranches from 17 Transactions
RESERVOIR FUNDING: S&P Chips Ratings on 72 Tranches from 20 CDOs
ROME FINANCE: Files for Chapter 11; Fraud Case Pending
ROUSE COMPANY: Moody's Cuts Sr. Unsecured Debt Rtng to B3 from Ba3
SHUMATE INDUSTRIES: Intervale Capital Discloses 10% Equity Stake
SMURFIT-STONE: Fitch Cuts Preferred Stock Rating to 'CCC/RR6'
SOLOMON TECHNOLOGIES: Issues 23.7MM Shares to 4 Debenture Holders
SOLUTIA INC: Profits Slide to $24 Mln in 3rd Qtr 2008
SYMPHONY CREDIT: Moody's Trims $19MM Class D Notes Rating to 'B2'
SYNTAX-BRILLIAN: Court Approves Wilson Sonsini as Counsel
TEKNI-PLEX INC: Grant Stock Options to CEO Young and CFO Langley
TELTRONICS INC: Names Angela Marvin as Chief Financial Officer
THINKENGINE NETWORKS: Sept. 30 Balance Sheet Upside-Down by $2 Mln
THINKENGINE NETWORKS: Sept. 30 Balance Sheet Upside-down by $1.9MM
TOUSA INC: Updates Restructuring Plan; Valued at $399Mln
TOUSA INC: Has Until February 22 to File Plan of Reorganization
US AIRWAYS: Enters into Amendment to Loan and Other Agreements
US AIRWAYS: Post $242MM Net Loss in Quarter ended September 30
US AIRWAYS: Secures $950 Million in Financing and Liquidity
USG CORP: Weak Operating Results Cue S&P to Cut Rating to 'BB-'
VERTICAL CDO: S&P Lowers All Rated Notes Ratings; Keeps Neg. Watch
VESTA INSURANCE: Gaines Has No Tax Liabilities, Says Plan Trustee
VESTA INSURANCE: Trustee Wants Court to Deny Haskel Dismissal Plea
VESTA INSURANCE: Trustee Wants Until Nov. 26 to File Responses
VESTA INSURANCE: Court Approves Whitaker-Tait Agreement
VIASPACE INC: Unit to Acquire Two Firms Under Purchase Agreement
WACHOVIA BANK: Fitch Cuts $79 Mil. Class K Notes Rating to 'BB'
WACHOVIA BANK: S&P Puts Low-B Ratings on Three Certificate Classes
WENDY'S INTERNATIONAL: Moody's Lowers Ratings with Stable Outlook
WORLD HEART: Effects Reverse Stock Split, Begins Nasdaq Trading
X-RITE INC: S&P Lifts Credit Rating to 'B' After Debt Repayment
X-RITE INCORPORATED: Wants to Register 7,000,000 Shares for Sale
ZVUE CORPORATION: Names Three Directors to Fill Board Vacancies
* BOOK REVIEW: Crafting Solutions for Troubled Businesses:
*********
ABSC TRUST: Moody's Cuts Ratings on 164 Tranches from 17 RMBS
-------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 164
tranches from 17 subprime RMBS transactions issued by ABSC. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, subprime residential mortgage
loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE1
-- Cl. M2, Downgraded to A1 from Aa2
-- Cl. M3, Downgraded to A3 from Aa3
-- Cl. M4, Downgraded to Baa3 from A1
-- Cl. M5, Downgraded to Ba2 from A2
-- Cl. M6, Downgraded to B2 from A3
-- Cl. M7, Downgraded to Caa3 from Baa1
-- Cl. M8, Downgraded to Ca from Baa2
-- Cl. M9, Downgraded to C from Ba2
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE2
-- Cl. M2, Downgraded to A3 from Aa3
-- Cl. M3, Downgraded to Ba1 from A2
-- Cl. M4, Downgraded to B1 from Baa1
-- Cl. M5, Downgraded to Caa2 from Baa3
-- Cl. M6, Downgraded to Ca from Ba1
-- Cl. M7, Downgraded to C from Ba3
-- Cl. M8, Downgraded to C from B3
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE3
-- Cl. M3, Downgraded to A1 from Aa3
-- Cl. M4, Downgraded to Baa1 from A1
-- Cl. M5, Downgraded to Ba1 from A2
-- Cl. M6, Downgraded to B1 from A3
-- Cl. M7, Downgraded to B3 from Baa1
-- Cl. M8, Downgraded to Caa2 from Baa2
-- Cl. M9, Downgraded to Ca from Ba2
-- Cl. M10, Downgraded to Ca from B1
-- Cl. M11, Downgraded to Ca from Caa2
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE4
-- Cl. M3, Downgraded to A1 from Aa3
-- Cl. M4, Downgraded to A3 from A1
-- Cl. M5, Downgraded to Baa2 from A2
-- Cl. M6, Downgraded to Baa3 from Baa2
-- Cl. M7, Downgraded to Ba2 from Baa3
-- Cl. M8, Downgraded to B1 from Ba1
-- Cl. M9, Downgraded to Caa2 from Ba3
-- Cl. M10, Downgraded to Ca from B1
-- Cl. M11, Downgraded to C from Caa2
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE5
-- Cl. M6, Downgraded to Baa1 from A3
-- Cl. M7, Downgraded to Ba1 from Baa1
-- Cl. M8, Downgraded to B3 from Ba1
-- Cl. M9, Downgraded to C from B2
-- Cl. M10, Downgraded to C from Caa1
-- Cl. M11, Downgraded to C from Caa3
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE6
-- Cl. M7, Downgraded to Ba1 from Baa1
-- Cl. M8, Downgraded to Caa1 from Ba1
-- Cl. M9, Downgraded to Caa3 from B2
-- Cl. M10, Downgraded to Ca from Caa2
-- Cl. M11, Downgraded to Ca from Caa3
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2005-HE7
-- Cl. M5, Downgraded to Ba2 from Baa2
-- Cl. M6, Downgraded to Caa1 from Baa3
-- Cl. M7, Downgraded to Caa3 from B3
-- Cl. M8, Downgraded to Ca from Caa2
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2006-HE2
-- Cl. A1, Downgraded to Aa3 from Aaa
-- Cl. A3, Downgraded to Baa1 from Aaa
-- Cl. A4, Downgraded to Baa2 from Aaa
-- Cl. A1A, Downgraded to Baa2 from Aaa
-- Cl. M1, Downgraded to Caa1 from Aa1
-- Cl. M2, Downgraded to C from Baa3
-- Cl. M3, Downgraded to C from B1
-- Cl. M4, Downgraded to C from B2
-- Cl. M5, Downgraded to C from B3
-- Cl. M6, Downgraded to C from Caa2
-- Cl. M7, Downgraded to C from Caa3
-- Cl. M8, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2006-HE3
-- Cl. A4, Downgraded to Aa2 from Aaa
-- Cl. A5, Downgraded to A1 from Aaa
-- Cl. M1, Downgraded to B1 from Aa2
-- Cl. M2, Downgraded to Caa2 from Aa3
-- Cl. M3, Downgraded to C from Baa1
-- Cl. M4, Downgraded to C from B1
-- Cl. M5, Downgraded to C from B2
-- Cl. M6, Downgraded to C from B3
-- Cl. M7, Downgraded to C from Caa1
-- Cl. M8, Downgraded to C from Caa2
-- Cl. M9, Downgraded to C from Caa3
-- Cl. M10, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
2006-HE4
-- Cl. A2, Downgraded to Aa1 from Aaa
-- Cl. A5, Downgraded to A3 from Aaa
-- Cl. A6, Downgraded to Baa1 from Aaa
-- Cl. M1, Downgraded to Caa3 from A2
-- Cl. M2, Downgraded to C from B1
-- Cl. M3, Downgraded to C from B2
-- Cl. M4, Downgraded to C from B3
-- Cl. M5, Downgraded to C from Caa2
-- Cl. M6, Downgraded to C from Caa3
-- Cl. M7, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
AEG 2006-HE1
-- Cl. M-1, Downgraded to A2 from Aa1
-- Cl. M-2, Downgraded to Baa3 from Aa2
-- Cl. M-3, Downgraded to B3 from Aa3
-- Cl. M-4, Downgraded to Ca from A1
-- Cl. M-5, Downgraded to C from A2
-- Cl. M-6, Downgraded to C from Baa3
-- Cl. M-7, Downgraded to C from B2
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. M-10, Downgraded to C from Caa3
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
NC 2005-HE8
-- M2, Downgraded to Aa3 from Aa2
-- M3, Downgraded to Baa1 from Aa3
-- M4, Downgraded to Baa3 from A1
-- M5, Downgraded to B2 from A2
-- M6, Downgraded to Ca from A3
-- M7, Downgraded to C from Baa3
-- M8, Downgraded to C from B1
-- M9, Downgraded to C from Caa2
-- M10, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan Trust
Series MO 2006-HE6
-- Cl. A4, Downgraded to Aa3 from Aaa
-- Cl. A5, Downgraded to A2 from Aaa
-- Cl. M1, Downgraded to Ba1 from A3
-- Cl. M2, Downgraded to B3 from B1
-- Cl. M3, Downgraded to Ca from B2
-- Cl. M4, Downgraded to C from B2
-- Cl. M5, Downgraded to C from B3
-- Cl. M6, Downgraded to C from Caa1
-- Cl. M7, Downgraded to C from Caa2
-- Cl. M8, Downgraded to C from Caa3
-- Cl. M9, Downgraded to C from Ca
-- Cl. M10, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan
Trust, Series AMQ 2007-HE2
-- Cl. A1, Downgraded to Ba1 from Aaa
-- Cl. A3, Downgraded to Baa2 from Aa1
-- Cl. A4, Downgraded to B2 from Aa3
-- Cl. A5, Downgraded to B3 from A2
-- Cl. M1, Downgraded to C from Ba1
-- Cl. M2, Downgraded to C from B1
-- Cl. M3, Downgraded to C from B1
-- Cl. M4, Downgraded to C from B2
-- Cl. M5, Downgraded to C from B3
-- Cl. M6, Downgraded to C from Caa1
-- Cl. M7, Downgraded to C from Caa2
-- Cl. M8, Downgraded to C from Caa3
-- Cl. M9, Downgraded to C from Ca
-- Cl. M10, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan
Trust, Series OOMC 2006-HE5
-- Cl. A4, Downgraded to Aa2 from Aaa
-- Cl. A5, Downgraded to A1 from Aaa
-- Cl. M1, Downgraded to Baa3 from Aa1
-- Cl. M2, Downgraded to Caa2 from Ba1
-- Cl. M3, Downgraded to Ca from B1
-- Cl. M4, Downgraded to C from B2
-- Cl. M5, Downgraded to C from B3
-- Cl. M6, Downgraded to C from Caa1
-- Cl. M7, Downgraded to C from Caa2
-- Cl. M8, Downgraded to C from Caa3
-- Cl. M9, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation Home Equity Loan
Trust, Series RFC 2007-HE1
-- Cl. A1A, Downgraded to A1 from Aaa
-- Cl. A1B, Downgraded to A1 from Aaa
-- Cl. A4, Downgraded to Baa3 from Aaa
-- Cl. A5, Downgraded to Ba1 from Aaa
-- Cl. M1, Downgraded to B2 from A2
-- Cl. M2, Downgraded to Ca from Ba1
-- Cl. M3, Downgraded to C from B1
-- Cl. M4, Downgraded to C from B2
-- Cl. M5, Downgraded to C from B3
-- Cl. M6, Downgraded to C from B3
-- Cl. M7, Downgraded to C from Caa1
-- Cl. M8, Downgraded to C from Caa2
-- Cl. M9, Downgraded to C from Caa3
-- Cl. M10, Downgraded to C from Ca
Issuer: Asset Backed Securities Corporation, Series AMQ 2006-HE7
-- Cl. A1, Downgraded to Ba1 from Aaa
-- Cl. A4, Downgraded to B2 from Aa2
-- Cl. A5, Downgraded to B3 from A1
-- Cl. M1, Downgraded to C from Ba3
-- Cl. M2, Downgraded to C from B1
-- Cl. M3, Downgraded to C from B2
-- Cl. M4, Downgraded to C from B3
-- Cl. M5, Downgraded to C from Caa1
-- Cl. M6, Downgraded to C from Caa2
-- Cl. M7, Downgraded to C from Caa3
-- Cl. M8, Downgraded to C from Caa3
-- Cl. M9, Downgraded to C from Ca
ACUSPHERE INC: Trades on Alternative Listing Until December 31
--------------------------------------------------------------
Acusphere, Inc., disclosed that the Nasdaq Hearings Panel has
approved its request to transfer its common stock to the Nasdaq
Capital Market, under the same trading symbol, ACUS, effective
Oct. 29, 2008. Acusphere's common stock was traded on the Nasdaq
Global Market.
The listing transfer was part of the company's plan of compliance
as presented to the Nasdaq Hearings Panel in September 2008 in
connection with the company's appeal of the Nasdaq Global Market
delisting notice it received on July 14, 2008. The company
failed to meet NASDAQ's minimum bid price requirement of $1.00
and NASDAQ's $10.0 million stockholders' equity requirement for
continued listing on the Nasdaq Global Market. Once Acusphere's
common stock is transferred to the Nasdaq Capital Market, it
will have until Dec. 31, 2008, to have at least $2.5 million in
stockholders' equity or demonstrate compliance with one of the
alternative listing criteria, including $35.0 million in market
capitalization for a minimum of ten consecutive trading days.
Based upon the common stock outstanding, Acusphere could meet
the market capitalization criteria with a stock price of $0.71 or
higher. Acusphere has until April 17, 2009, to achieve a closing
bid price of $1.00 or more for a minimum of ten consecutive
trading days. If Acusphere does not satisfy these requirements,
its common shares may be delisted from The Nasdaq Stock
Market LLC.
Sherri C. Oberg, president and chief executive officer of
Acusphere, said, "We are very pleased that NASDAQ has approved
our appeal to retain our listing on The Nasdaq Stock Market LLC.
We appreciate the additional time to demonstrate compliance with
the applicable listing standards, and we are completely focused
on executing our business strategy, which we are confident will
assist us in meeting this goal."
About Acusphere Inc.
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) -- http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
company are focused on developing proprietary drugs that can
offer significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
Going Concern Doubt
Deloitte & Touche LLP in Boston raised substantial doubt about
the ability of Acusphere Inc. to continue as a going concern after
it audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor pointed to the company's recurring
losses from operations, negative cash flows from operations, and
the projected funding needed to sustain its operations.
As of June 30, 2008, the company had cash and equivalents of
$12.0 million, current liabilities of $21.1 million and
stockholders' deficit of $0.8 million. During the six months
ended June 30, 2008, the company incurred a net loss available to
common stockholders of $25.6 million. During the six months ended
June 30, 2008, operating activities used approximately
$10.4 million of cash. Given the company's results from
operations, current forecasts, and financial position as of
June 30, 2008, the company will require significant additional
funds in order to fund operations through and beyond the fourth
quarter of 2008.
These conditions raise substantial doubt about the company's
ability to continue as a going concern. The accompanying
financial statements have been prepared on the basis of a going
concern assumption and do not reflect any adjustments that might
result from the outcome of this uncertainty.
ALLTELL CORP: Moody's Keeps Ratings Under Review for Possible Cuts
------------------------------------------------------------------
Moody's Investors Service confirmed the A3 senior unsecured rating
of Verizon Communications based on Moody's assessment that the
cash flows generated by Verizon Wireless will continue to grow at
a healthy rate despite the U.S. economic downturn. Moody's
anticipates that, especially over the next two years, the bulk of
this cash will be directed to Verizon Communications as VZW
quickly repays an inter-company loan. The pending acquisition of
Alltel will increase leverage quite significantly.
However, the cash flows generated by Verizon Wireless, in
combination with Moody's expectation that future share repurchases
will be limited, should allow Verizon Communications to meet its
various obligations and investment needs and reduce debt.
"Cash flows from Verizon's wireless business have been strong, and
we expect that to continue despite the soft economy," said Dennis
Saputo, Moody's Senior Vice President. "The strength of the
wireless business offers substantial support to the rating, and
helps offset challenges in some of the wireline subsidiaries."
Moody's also lowered the ratings of 4 wireline-operating companies
because it expects their financial profiles to remain under
pressure as a result of intense competition, combined with the
high, albeit declining, costs of the FiOS project. In addition,
Moody's confirmed the ratings of 9 Verizon wireline subsidiaries
based on the expectation that the parent company will continue to
provide a level of support that enables the credit profiles at
these companies to remain close to current levels.
The outlook for Verizon and all its subsidiaries is negative.
"The negative outlook reflects execution risks associated with
Verizon's plan to reduce its leverage to a level that is
commensurate with the A3 rating following the Alltel acquisition
amid a weakening economy", commented Saputo. In addition, the
company faces very large financing needs related to the
acquisition during a period of difficult market conditions. The
parent company's existing $6 billion revolver matures in September
2009, the remaining financing for the Alltel acquisition
(estimated at about $21 billion) is uncommitted and a little over
$7 billion of debt matures in the next twelve months.
These actions complete the ratings review of Verizon and its
subsidiaries initiated on June 6, 2008 when Verizon announced that
its 55% owned subsidiary, Verizon Wireless, planned to acquire
Alltel for about $28.1 billion in cash and assumed debt. Moody's
is in the process of evaluating Verizon Wireless and will be
assigning a rating to the company shortly. The review of Alltel's
debt ratings, initiated at the same time, remains ongoing pending
greater assurance that the transaction will close as expected.
Further Rationale for Confirmation of Verizon Communications
Ratings
The confirmation of the parent company's A3 rating reflects
Moody's assessment that the free cash flows generated by Verizon
Wireless will continue to grow at a healthy pace, despite a
slowing economy, as the company benefits from economies of scale,
the high operating leverage inherent in its business model and
synergies resulting from its acquisition of Alltel.
Moody's believes that VZW's state-of-the-art network supports
excellent service quality, a strong brand reputation, and allows
the company to successfully introduce new and enhanced service
offerings, leading to above-average revenue growth and below-
average churn rates. These factors, when coupled with an
efficient cost structure are expected to lead to steadily
improving earnings and cash flows which will should allow Verizon
Wireless to steadily reduce the significant amount of debt
incurred in the acquisition of Alltel.
Moody's anticipates that, especially over the next two years, the
bulk of the excess cash flow generated by VZW will be upstreamed
to Verizon Communications, enabling the parent to meet it various
obligations and invest in its wireline operations without
incurring additional debt. The A3 rating anticipates that parent
company share repurchases will be limited until the consolidated
entity restores its balance sheet to targeted levels of about 1.8
times Debt to EBITDA.
There are several challenges confronting Verizon Communications.
Although Moody's expects VZW's contribution to Verizon's
proportionate earnings and cash flow to continue increasing from
about 43% today, a weakening economy may preclude the company from
reducing debt levels as quickly as initially expected. Wireless
subscriber growth is slowing as penetration increases toward 100%
(from about 85% today) and competition remains fierce. Switching
costs are low and pricing power is limited. Finally, it is
unclear whether expanding data usage will continue to offset
pricing pressure on voice services and sustain recent wireless
ARPU growth, especially if the U.S. economy weakens more than
expected and if the downturn becomes protracted.
"On the wireline side, overall business risk is still increasing
with accelerating line losses and the shift in the company's asset
base and investment needs toward highly competitive and capital-
intensive business segments like video, broadband and corporate
data", Saputo added. The margins on these products are
significantly lower than the margins on traditional voice
services.
A reconfiguration of VZW's ownership structure is not factored
into the current ratings. A potential buyout of Vodafone's 45%
stake in VZW could have significant rating implications for the
ratings of VZ, its operating subsidiaries and VZW, depending on
how the takeout is financed.
Rationale for Ratings Actions on the Wireline Operating Companies
Verizon New York
"The rating of Verizon New York was confirmed at Baa3 because of
the significant amount of support that this subsidiary receives
from its parent company --- an indication of its strategic
importance to Verizon", according to Dennis Saputo. While Verizon
has not taken a dividend from VZ-NY for several years, in May 2007
Verizon reclassified $2.0B of VZ-New York's intercompany debt to
equity. In addition, access line losses appear to have moderated
(dropping from 10.8% in 2006 to 9.8% in 2007) and the company's
annual revenue decline has slowed to less than 5% for the first
time in four years.
Nevertheless, intense competition, a very high cost structure, a
difficult regulatory environment and a very weak balance sheet
make it unlikely that the company will be able to significantly
strengthen its credit metrics materially over the next few years.
Moody's expects that Verizon New York's free cash flow will remain
under considerable pressure for some time, given the likelihood
that access line losses will continue to drive lower revenues,
that much of the company's cost structure is fixed, and that it
faces the expense of a significant network upgrade in its largest
market, New York City. A relatively significantly under funded
pension obligation also puts pressure on the rating.
Consequently, Verizon New York is likely to remain the lowest
rated of the Verizon wireline subsidiaries for quite some time.
Verizon New England
Moody's downgraded the senior unsecured long-term debt rating of
Verizon New England, Inc. (VZ-NE) to Baa2 from Baa1 because
Moody's believe that the financial profile of VZ-NE will continue
to be negatively impacted by strong competition, a high cost
structure and the expenses associated with ongoing fiber
deployment (the project is expected to be completed in 2010).
Competitive inroads and the investment associated with the FiOS
network upgrade have had only a modest impact on VZ-NE's leverage
profile over the last few years because of the actions taken by
Verizon to support VZ-NE's balance sheet. Access lines and
revenues have declined about 8% and 2%, respectively in each of
the last two years and EBITDA margins have gone from over 38% in
2005 to just over 34% in 2007. Debt to EBITDA increased to 3.0x
over the same period.
Earlier this year Fairpoint Communications merged with Verizon
Maine, Verizon New Hampshire, and Verizon Vermont in a reverse
Morris Trust transaction. The transaction closed on March 31,
2008. In order to offset the loss of a portion of the earnings and
cash flows from these three states, a little over $500 million of
VZ-NE's debt was paid down and reduced through an internal
exchange. Nevertheless, Moody's believes that this transaction
will increase VZ-NE's Debt to EBITDA ratio by about 60 basis
points since the amount of debt reduction was only modestly higher
than the loss of EBITDA.
Verizon Pennsylvania, Verizon New Jersey, and Verizon Maryland
The ratings of Verizon New Jersey, Verizon Pennsylvania, and
Verizon Maryland were all lowered to Baa1 from A3 because Moody's
believe that competitive challenges in those states will remain
intense. Access line losses in all 3 states continued to increase
in 2007, margins at all three companies continue to steadily
decline and investment spending has increased materially in the
last couple of years. Moody's rating action incorporates Moody's
belief that these companies are more likely to rely on parent
company support given their challenging competitive environments
and relatively significant investment needs. Consequently, their
leverage ratios are likely to remain among the highest in the
Verizon family.
Verizon Virginia
The senior unsecured debt rating of Verizon Virginia was confirmed
at Baa1 despite currently having one of the stronger balance
sheets and higher operating margins in the complex because Moody's
believe that cable competition in the company's service territory
will intensify materially in the near future. Therefore, Moody's
expects access line loss rates (which at 6.9% in 2007 were below
the rated Verizon operating company average of about 8.3%) to
increase quickly and lead to margin erosion and pressure on
operating cash flows. Capital spending has been above average
over the last few years and Moody's expects it will remain
elevated.
Consequently, Moody's believe that the company's leverage metrics
will deteriorate modestly from current levels. At 51.9% the
company's EBITDA margin was well above the average for the rated
ILECs of 37.6% and Debt to EBITDA at 1.7 times was below the rated
ILEC average of 2.7 times.
Verizon California, Verizon Delaware, Verizon North, Verizon
Northwest, and Verizon West Virginia
Moody's has confirmed the A3 senior unsecured ratings of Verizon
California, Verizon Delaware and Verizon Northwest as the rating
agency expects these companies to maintain their healthy cash
flows and moderate leverage over the rating horizon. Moody's
expects EBITDA margins for these three companies to remain strong
and the level of competition in their markets to remain stable in
the near-term, especially in Delaware and California, which
already face intense competition but where greater FiOS deployment
is expected to moderate subscriber losses to cable competition.
Moody's has also confirmed the A3 senior unsecured debt ratings of
Verizon West Virginia and Verizon North. While capital investment
has remained well below average at both these companies,
competitive challenges have also been slow to develop although
recent line losses at Verizon North indicate that competition is
accelerating in that region. However, EBITDA margins are over 60%
at Verizon North and its Debt to EBITDA ratio is 1.4 times, both
metrics the best of the Verizon operating companies.
Consequently, Moody's anticipates that the company will be able to
sustain its strong credit profile in the face of increasing
competition.
While EBITDA margins are lower at Verizon West Virginia,
competition is expected to remain relatively subdued over the
near-term (access line losses were 7% in 2007) which should enable
the company to sustain a strong credit profile (Debt to EBITDA is
1.4 times).
GTE Southwest and Verizon Florida
The senior secured debt ratings of GTE Southwest and the senior
unsecured debt rating of Verizon Florida were confirmed at Baa1
because Moody's expects the operating performance of both
companies to stabilize in the near-term. Both companies were
among the first to modernize their networks by deploying fiber to
homes. While the rate of access line loss continued to increase
during 2007 at Verizon Florida, Moody's notes that the rate of
decline slowed at GTE Southwest for the second year in a row and
revenue growth at that company accelerated to over 3.5% in 2007.
Parent Support of Wireline Subsidiaries
For several years now, Verizon has taken steps to support the
credit profile of its operating telephone companies. During this
period, the wireline subs have not issued any external debt while
their individual funding needs have been provided via inter-
company loans from the parent. In addition, Verizon has taken
steps to keep the level of total debt at each of the individual
operating subs relatively flat, mainly by restricting and, in some
cases eliminating the amount of dividends that the subs upstream.
Nevertheless, average leverage ratios have increased steadily over
the last three years, mainly because of earnings pressures as high
margin legacy voice revenues are replaced by lower margin revenue
streams and high investment requirements.
Although Moody's continues to be concerned with the operating
performance of some of Verizon's wireline operating subsidiaries
and Moody's continue to have its doubts about the ultimate return
prospects of the FiOS investment, Moody's recognize that FiOS
costs are coming down, deployment is on schedule, the product is
meeting with good customer acceptance, and that thus far, the
products penetration appears to have an inverse relationship with
the number of line losses in some markets.
Most importantly, Moody's believes that Verizon's overall
financing policies of its wireline subsidiaries indicates
relatively strong parental support for these subsidiaries,
consequently, Moody's give these subsidiaries, several notches of
rating lift from the ratings that would result from their
individual, stand-alone credit quality.
Moody's believes that at least over the next 12 to 18 months, the
financial profile of most Verizon operating telephone subsidiaries
will continue to be pressured by strong competition and the
expenses and capital requirements associated with ongoing fiber
deployment (the project is expected to be completed in 2010).
However, Moody's believes that significant previous network
investment and additional cost reduction initiatives should slowly
enable most of these companies to begin to stabilize their
operating performance. While it expects that the earnings and
cash flow generating capacity of the group, as a whole, will
remain pressured through at least the middle of 2009, Moody's
believes that dividends to the parent will be limited such that
leverage metrics at these subsidiaries, as a group, stabilize at
about 3.0 times Debt to EBITDA, Moody's adjusted.
For FYE 2007 and LTM to June 30, 2008, the average Moody's
adjusted Debt to EBITDA ratio for Verizon's rated wireline
operating subsidiaries was 2.7 times.
Complete list of rating actions:
Ratings confirmed are:
* Verizon Communications: senior unsecured, A3
* NYNEX Corporation: senior unsecured, A3
* GTE Corporation: senior unsecured, Baa1
* Verizon Delaware, Inc.: debentures, A3
* Verizon West Virginia, Inc.: debentures, A3
* Verizon North, Inc.: debentures, A3
* Verizon Northwest, Inc.: debentures, A3
* Verizon California, Inc.: debentures, A3
* Verizon Virginia, Inc.: notes and debentures, Baa1
* Verizon Florida, Inc.: debentures, Baa1
* GTE Southwest, Inc.: first mortgage bonds, Baa1
* Verizon New York, Inc.: notes and debentures, Baa3
Ratings downgraded are:
* Verizon New England, Inc.: notes and debentures, to Baa2 from
Baa1
* Verizon New Jersey, Inc.: debentures, to Baa1 from A3
* Verizon Pennsylvania, Inc.: debentures, to Baa1 from A3
* Verizon Maryland, Inc.: debentures, to Baa1 from A3
Ratings remaining on review for possible upgrade:
Alltel Corporation:
-- $2.3 billion Senior Unsecured Notes -- Caa1, LGD 6 (95%)
-- $1.0 billion Senior Unsecured Toggle Notes -- Caa1 LGD 5
(79%)
-- Corporate Family Rating -- B2
-- Probability of Default Rating -- B2
Alltel Communications:
-- $14.0 billion Senior Secured Term Loan B due 2015 -- Ba3,
LGD2 (27%)
-- $1.5 billion Senior Secured Revolving Credit Facility due
2013 - Ba3, LGD2 (27%)
-- $7.7 billion Senior Unsecured Committed Bridge Facility --
Caa1, LGD 5 (79%)
Headquartered in New York City, Verizon Communications Inc. is the
second largest telecommunications provider in the United States
delivering broadband and other wireline and wireless communication
services to residential, business, government and wholesale
customers. Verizon Wireless, headquartered in Basking Ridge, New
Jersey is a joint venture between Verizon Communications, which
owns 55%, and Vodafone, which owns the remainder. Headquartered
in Little Rock, Arkansas, ALLTEL Corporation operates the nation's
largest wireless network.
AMERICAN MEDIA: Extends $570MM Offering of Senior Sub. Notes
------------------------------------------------------------
American Media, Inc.'s subsidiary American Media Operations,
Inc. has extended the expiration date for and amended its cash
tender offers and consent solicitations in respect of an
aggregate of approximately $570 million of its outstanding senior
subordinated notes, consisting of:
1) $400,000,000 aggregate principal amount of 10-1/4%
Series B Senior Subordinated Notes due 2009 (CUSIP No.
02744RAH0) and $14,544,000 aggregate principal amount of
10-1/4% Series B Senior Subordinated Notes due 2009
(CUSIP No. 02744RAM9); and
2) $150,000,000 aggregate principal amount of 8-7/8% Senior
Subordinated Notes due 2011 (CUSIP No. 02744RAK3) and
$5,454,000 aggregate principal amount of 8-7/8% Senior
Subordinated Notes due 2011 (CUSIP No. 02744RAP2).
The Tender Offers and Consent Solicitations, which were
originally scheduled to expire at 11:59 p.m., New York City
time, on Sept. 25, 2008, and were extended until 5:00 p.m., New
York City time, on Oct. 28, 2008, are being further extended
until 5:00 p.m., New York City time, on Nov. 21, 2008, unless
further extended.
In addition, AMOI has amended the terms of the Tender Offers and
Consent Solicitations to provide that the Tender Offers and
Consent Solicitations are being made to holders of record of
Existing Notes as of 5:00 p.m. on Nov. 17, 2008. All other
terms, provisions and conditions of the Tender Offers and
Consent Solicitations will remain in full force and effect.
AMOI also disclosed that it continues to be engaged in
discussions with an ad hoc committee of holders of Existing
Notes regarding the possible amendment of the Tender Offers and
Consent Solicitations.
The Tender Offers and Consent Solicitations are being made
pursuant to the Offer to Purchase and Consent Solicitation
Statement, as amended, and the related Letter of Transmittal and
Consent, and the Consent Solicitation Statement, as amended, and
the related Letter of Consent, each dated Aug. 26, 2008, which
more fully set forth the terms of the Tender Offers and the
Consent Solicitations. Eligible holders who wish to receive the
total consideration must validly tender and not validly withdraw
their Existing Notes on or prior to the Expiration Time. All
other holders who wish to receive the consent payment must validly
consent and not validly revoke their consents on or prior to the
Expiration Time.
J.P. Morgan Securities Inc. is acting as the Dealer Manager for
the Tender Offers and Solicitation Agent for the Consent
Solicitations and can be contacted at (212) 357-0775 (collect).
MacKenzie Partners, Inc. is acting as the Information Agent for
the Tender Offers and Consent Solicitations well as Tabulation
Agent for the Consent Solicitations. Requests for documentation
relating to the Tender Offers and Consent Solicitations may be
directed to the Information Agent at (800) 322-2885 (toll free)
and (212) 929-5500 (collect).
About American Media Inc.
Headquartered in Boca Raton, Florida, American Media Operations
Inc., is a publisher of celebrity, health and fitness, and Spanish
language magazines, including Star, Shape, Men's Fitness, Fit
Pregnancy, Natural Health, and The National Enquirer. AMI also
owns Distribution Services Inc.
* * *
As reported in the Troubled Company Reporter on Sept. 3, 2008,
Standard & Poor's Ratings Services said that American Media
Operations Inc.'s (CCC+/Negative/--) announcement that it has
commenced a tender offer for its $414.5 million 10-1/4% senior
subordinated notes due 2009 and its $155.5 million 8-7/8% senior
subordinated notes due 2011 at par value does not currently affect
the rating or outlook on the company.
AMERICREDIT CORP: S&P Places 'BB-' Credit Rating Under Neg. Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
AmeriCredit Corp., including its 'BB-' long-term counterparty
credit rating, on CreditWatch with negative implications.
"The action reflects the pressure that deteriorating economic and
credit market conditions have placed on AmeriCredit's financial
profile," said Standard & Poor's credit analyst Rian M. Pressman,
CFA.
For the quarter ended Sept. 30, 2008, the company lost
approximately $1.7 million, primarily because of increased loan
provisions, which grew by $30.2 million year-over-year despite
portfolio shrinkage of more than $3 billion. Annualized net
charge-offs were 7.3% of average finance receivables, up almost
200 basis points from the comparable quarter in 2007.
AmeriCredit's liquidity position has also weakened, although S&P
believes that the remaining availability under the company's
warehouse lines is adequate given management's revised origination
target of $100 million per month. Unrestricted cash balances were
$244 million at quarter-end, down almost $200 million on a
sequential-quarter basis, primarily because the company retired
$115 million of its outstanding 1.75% convertible notes and
reclassified $112 million that is invested in The Reserve Primary
Money Market Fund into "other assets" on its balance sheet.
Within the next several months, S&P expects continued asset
quality deterioration may drive increased cash usage, further
weakening liquidity. These cash calls may be associated with
credit enhancement requirements in AmeriCredit's subprime
warehouse lines or securitization trusts, and will be largely
funded by receivable repayments and existing cash balances. More
importantly, although AmeriCredit is currently in compliance with
all covenants, increased net losses could trigger a default in its
warehouse lines or the cancellation of its forward asset-backed
sales commitment with Deutsche Bank.
To resolve the CreditWatch, S&P will assess AmeriCredit's
liquidity/funding position and capitalization, as well as the
potential for further asset quality deterioration, within the
context of extremely difficult economic and credit market
conditions. S&P may lower the rating one or more notches.
ARBY'S RESTAURANT: Moody's Trims Ratings on Weaker Performance
--------------------------------------------------------------
Moody's Investors Service lowered Arby's Restaurant Group, Inc.'s
corporate family rating to B2 from B1 and probability of default
rating to B3 from B2. In addition, Moody's lowered Arby's senior
secured ratings to B1 (LGD3, 30%) from Ba3 (LGD2, 28%). The
outlook is negative.
Ratings lowered are:
-- Corporate family rating lowered to B2 from B1
-- Probability of default rating lowered to B3 from B2
-- Guaranteed senior secured revolving credit facility, due
July 25, 2011, lowered to B1 (LGD3, 30%) from Ba3 (LGD 2,
28%)
The outlook is negative
The downgrade of the CFR to B2 from B1 reflects Arby's weaker than
expected operating performance due in-part to a persistently weak
consumer environment and high cost inflation that has resulted in
debt protection metrics that are more representative of the
revised ratings.
The B2 corporate family rating reflects Arby's high leverage and
weak debt protection metrics, as well as Moody's views that the
cushion under its financial covenants is modest and may require
the company to seek amendments from its lenders. The ratings are
supported by Arby's reasonable level of brand awareness in its
core markets, meaningful scale with approximately 3,600 units, and
good distribution between its lunch and dinner day parts.
The B1 senior secured rating reflects the bank facilities' first
lien position in the capital structure as well as the material
amount of liabilities that are ranked junior to this facility.
This should provide a sufficient enough cushion for these secured
lenders in a distress situation that result in a rating one notch
above the CFR.
The negative outlook reflects the modest cushion under Arby's bank
covenants and the uncertainty over the company's ability to
materially improve the cushion through stronger operating
performance over the near term. This is due to the expectation
that a weak consumer environment, cost inflation, and competitive
pressures will persist over the intermediate term. Should Arby's
have difficulty meeting its bank financial covenants, it could
cause it to seek an amendment or waiver from its banks. Given the
very difficult macro-economic and banking environment, this could
result in Arby's obtaining more stringent and expensive terms from
its banks than currently exist.
The most recent rating action on Arby's was the affirmation of the
ratings and negative outlook on April 24, 2008.
Arby's Restaurant Group, Inc. owns, operates and franchises quick
service restaurant concepts that specialize in the sandwich
segment of the restaurant industry. As of June 30, 2008, Arby's
owned approximately 1,170 restaurants and franchised an additional
2,550, the majority of which are in the U.S.
Arby's, which generated revenues of approximately $1.2 billion for
the twelve month period ending June 30, 2008, is a wholly-owned
subsidiary of Wendy's/Arby's Group Inc. (Wendy's/Arby's).
ASYST TECH: Non-Compliant with Fin. Covenants, Negotiates Waiver
----------------------------------------------------------------
Asyst Technologies, Inc., reported preliminary financial results
for its fiscal second quarter ended Sept. 30, 2008.
Non-GAAP net loss for the fiscal second quarter was $7.8 million
which compares with a net loss of $7.2 million in the prior
sequential quarter. Non-GAAP net loss excludes estimated
goodwill impairment charges of $85-$90 million well as
amortization of intangibles.
Net sales for the fiscal second quarter were $95.1 million, which
compares with $100.3 million in the prior sequential quarter.
Net sales related to automated material handling systems were
$70.1 million, which compares with $67.6 million in the prior
sequential quarter. Net sales related to tool and fab automation
solutions were $25.0 million, which compares with $32.7 million
in the prior sequential quarter.
Steve Schwartz, chairperson and chief executive officer of Asyst,
said, "We achieved new orders in the fiscal second quarter of
$107 million, up from $63 million in the prior quarter, largely on
the strength of a few customers who currently are continuing to
invest in AMHS. We are off to a good start for AMHS bookings in
our fiscal third quarter on the strength of the some of the same
customers, and again see the opportunity to build backlog.
Typically AMHS leads an upturn, however the recent soft outlook
for equipment suppliers and our own tools business leads us to a
cautious outlook for the first half of calendar 2009. We
therefore are continuing to reduce costs, including a
significant restructuring in the current quarter, which we
anticipate will provide an additional $20 million of annual
cost savings and positions us to be break-even or better on a
cash basis in our fiscal fourth quarter ending in March."
As of Sept. 30, 2008, preliminary cash and equivalents were
$79.1 million, up from $67.2 million as of June 30, 2008.
Preliminary total debt as of the end of the quarter was
$150.4 million, down from $154.8 million at the end of the fiscal
first quarter.
As a result of the current economic environment and recent
decline in the market value of the company, Asyst is conducting
an interim goodwill impairment analysis, which the company
anticipates will result in a non-cash charge of $85-$90 million
for the quarter. The charge is expected to reduce GAAP net income
and net income per share well as total assets and equity, but
would not impact non-GAAP earnings per share. However, as a
result of the reduction in shareholders' equity, the company
would not be in compliance as of Sept. 30, 2008, with the
covenant relating to maximum debt-to-capital ratios under its
primary credit facility, and the company therefore has initiated
discussions with its lenders about a waiver or further amendment
of covenant requirements under the facility. As of Sept. 30,
2008, total indebtedness under the facility was approximately
$79 million, all under a term loan that currently matures in
2012.
The company expects to report final results for the quarter upon
completion of the impairment analysis and in conjunction with the
SEC filing of its financial statements on Form 10-Q.
The company provided these guidance for the fiscal third quarter
ending Dec. 31, 2008:
-- Consolidated net sales are expected to be in the range of
$70 to $80 million. AMHS sales are expected to be in the
range of $55-$60 million, and tool and fab automation sales
are expected to be in the range of $15-$20 million.
-- Net loss in accordance with GAAP is expected to be in the
range of $0.25 to $0.30 per share, including the impact of
$3 to $5 million of restructuring charges related to the
cost reductions.
-- Non-GAAP net loss is expected to be in the range of $0.15
to $0.19 per share. In calculating non-GAAP net loss per
share, the company expects to exclude approximately
$5 million to $7 million for restructuring charges and
intangibles amortization, net of taxes.
About Asyst Technologies, Inc
Headquartered in Fremont, California, Asyst Technologies, Inc.
(NASDAQ:ASY) -- http://www.asyst.com/-- provides integrated
automation solutions that enable semiconductor and flat panel
display manufacturers to increase their manufacturing
productivity and protect their investment in materials during
the manufacturing process. Encompassing isolation systems, work-
in-process materials management, substrate-handling robotics,
automated transport and loading systems, and connectivity
automation software, Asyst's modular, interoperable solutions
allow chip and FPD manufacturers, well as original equipment
manufacturers, to select and employ the value-assured, hands-off
manufacturing capabilities that best suit their needs.
AVIS BUDGET: Fitch Cuts Ratings on Senior Debt; Negative Watch
--------------------------------------------------------------
Fitch Ratings has downgraded Avis Budget Car Rental LLC's Issuer
Default Ratings and outstanding debt ratings and placed them on
Rating Watch Negative:
Avis Budget Car Rental, LLC
-- Long-term IDR to 'BB-' from 'BB';
-- Senior secured debt to 'BB+' from 'BBB-'; and
-- Senior unsecured debt to 'B+' from 'BB-'.
Avis Budget Group, Inc.
-- Long-term IDR to 'BB-' from 'BB'.
Approximately $1.8 billion of debt is affected by these actions.
The downgrade reflects:
-- ABC's reduced funding flexibility given dislocations in the
capital markets and financial guarantor space;
-- Exposure to suppliers Ford and General Motors;
-- Expectations for significantly higher funding costs amidst a
cyclical downturn in the auto rental business.
While ABC has reduced its program cars in recent years, it does
remain heavily reliant on domestic original equipment
manufacturers for rental car supply. An expected decline in fleet
due to less airline travel will reduce the company's funding needs
over the near-term; however, future ABS issuance will command
higher interest rates and increased enhancement levels, which will
pressure profitability and cash flow.
The Rating Watch Negative reflects the uncertainty surrounding the
renewal of the $1.35 billion conduit facility, which matures in
December 2008, and the level of corporate EBITDA generation, given
expectations for reduced travel volume. EBITDA is a critical
component in the leverage and interest coverage covenants inherent
in the corporate debt issuances. Fitch believes expectations for
reduced EBITDA generation, combined with a fourth quarter step-
down in the maximum leverage covenant, could lead to a violation
of the corporate covenants, which could result in a change to
facility terms and pricing.
The resolution of the Rating Watch will be driven by an assessment
of relative liquidity and funding flexibility going forward.
Fitch does not expect its review to result in more than a one-
notch downgrade to the IDR; however, Fitch will also review the
relative notching of ABC's debt issuances, given an expectation
for reduced collateral coverage, as the conduit facility and
future ABS debt issuances will require higher levels of
enhancement.
AXCESS INTERNATIONAL: Plans Preferred Stock Issue to Raise Cash
---------------------------------------------------------------
Axcess International Inc. disclosed in a Securities and Exchange
Commission filing that it has authorized the raising of $600,000
of additional working capital through an exempt Preferred Stock
offering under the Securities Act of 1933 Section 4(6) private
offering of preferred stock to accredited and institutional
investors.
The Preferred Stock is designated as 2008B Preferred and consists
of 80 shares of Preferred Stock bearing no dividends. However,
the shares are convertible into common stock on a 10,000-to-one
basis.
In addition, the company issued 400,000 warrants to purchase the
company's common stock exercisable for five years at $1.50 per
share. Each warrant will be callable by the company if and when
the company's common stock share price exceeds $3.00 per share for
at least twenty (20) consecutive trading days. The Company will
use the proceeds for general working capital.
About Axcess International
Headquartered in Carrollton, Texas, Axcess International Inc. (OTC
BB: AXSI.OB) -- http://www.axcessinc.com/-- delivers wireless
intelligence through real-time business activity monitoring
solutions that improve productivity, security and revenue growth.
The systems derive wireless intelligence from automatic advanced
workforce management, workflow management, asset monitoring and
distributed sensing. Its revolutionary and patented Dot micro-
wireless technology platform combines RFID, RTLS and wireless
sensing for better decision-making and control throughout the
enterprise. Axcess is a portfolio company of Amphion Innovations
plc (AIM: AMP).
The company's balance sheet as of June 30, 2008, showed $693,222
in total assets, $5,907,610 in total liabilities, resulting to
$5,214,388 in shareholders' deficit. The company also had
$170,226,755 in accumulated deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $593,956 in total current assets
available to pay $3,167,693 in total current liabilities.
BEARINGPOINT INC: To Ask Shareholders' OK on Reverse Stock Split
----------------------------------------------------------------
BearingPoint, Inc., will hold its 2008 Annual Meeting of
Stockholders at 10 a.m. on Friday, Dec. 5, 2008, at The Sheraton
Premier at Tysons Corner, located at 8661 Leesburg Pike, Vienna,
Virginia.
At the annual meeting, stockholders will be asked to consider and
vote on proposals to:
-- Elect three directors to hold office until the 2011 annual
meeting of stockholders;
-- Ratify the appointment of Ernst & Young LLP as independent
registered public accounting firm for 2008; and
-- Approve an amendment to BearingPoint's Amended and Restated
Certificate of Incorporation that would permit
BearingPoint's board of directors to effect, at their
discretion, a reverse stock split of BearingPoint's common
stock at a ratio within the range from one-for-ten to one-
for-fifty.
To cure BearingPoint's continuing deficiency in meeting the New
York Stock Exchange's continued listing standard relating to
minimum $1 average share price, the board is seeking approval of
the reverse stock split to attempt to return BearingPoint's share
price to a level that will comply with this standard.
BearingPoint also disclosed that on Oct. 28, 2008, it was
notified by the NYSE that it is no longer in compliance with the
NYSE's continued listing standard requiring the company to
maintain a minimum average market capitalization of $100 million
over a consecutive 30 trading day period.
BearingPoint remains in communication with the NYSE regarding its
efforts to achieve compliance with the NYSE's continued listing
standards. Given that BearingPoint, to date, has not reached an
agreement regarding a sale of all or a portion of its business,
BearingPoint's board of directors directed its financial advisors
to explore the feasibility of restructuring all or a selected
series of its convertible debt.
BearingPoint believes that a restructuring of indebtedness or
sale of all or part of the company, or combination of the two, is
likely to be a necessary condition to achieving near-term
compliance with the NYSE's continued listing standard relating to
minimum average market capitalization, and the company has
communicated its position to the NYSE.
It is BearingPoint's intention to cure this deficiency and to
submit a plan demonstrating how it intends to comply with this
standard. If its plan is accepted, BearingPoint's common stock
will continue to be listed on the NYSE, subject to ongoing
reassessment. The company remains committed to proactively
pursuing strategic alternatives that could be in the best
interests of its shareholders, clients, creditors and employees,
and will continue to work directly with the NYSE to make sure they
are aware of its plans and progress.
Regardless of the company's continued efforts to regain
compliance with the NYSE's listing standards, the NYSE reserves
the right to suspend trading in a company's securities if it
decides the trading price of a company's securities has become
"abnormally low." If the NYSE were to take such an action
against the company, the company would have the right to a review
of this determination by a committee of the board of directors of
NYSE Regulation. Any application to delist the company's shares
would be pending the completion of applicable procedures,
including any appeal by the company of the NYSE Regulation
staff's decision.
About BearingPoint Inc.
Headquartered in McLean, Virginia, BearingPoint, Inc. (NYSE:BE) --
http://www.bearingpoint.com-- is a provider of management and
technology consulting services to Global 2000 companies and
government organizations in more than 60 countries worldwide. The
company's core services include management consulting, technology
solutions, application services and managed services. In North
America, BearingPoint delivers consulting services through its
Public Services, Commercial Services and Financial Services
industry groups (North American Industry Groups), which provides
industry-specific knowledge and service offerings. Outside of
North America, BearingPoint operates in Europe, the Middle East
and Africa (EMEA); the Asia Pacific region, and Latin America
(including Mexico).
As reported in the Troubled Company Reporter on Aug. 15, 2008,
BearingPoint Inc.'s balance sheet at June 30, 2008, showed total
assets of $1.95 billion, total liabilities of $2.37 billion,
resulting in a stockholders' deficit of roughly $423 million.
* * *
TCR reported on Oct. 1, 2008, that Moody's Investors Service has
placed the B2 corporate family, unsecured subordinated convertible
notes, and speculative grade liquidity ratings on review for
possible downgrade. The review was prompted by slower than
anticipated improvement in the company's free cash flow and
concerns about the company's ability to retain sufficient
liquidity in light of the $200 million 5% senior subordinated
convertible notes, which can be put to the company at the
investor's option on April 15, 2009. Moody's last rating action
was on December 7, 2007, when Moody's confirmed BearingPoint's B2
corporate family rating and assigned a negative rating outlook.
BOSCOV'S INC: Taps Klehr Harrions as Special Real Estate Counsel
----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
authorized Boscov's Inc., and its debtor affiliates to employ
Klehr, Harrison, Harvey, Branzburg & Eller LLP, as their special
real estate Counsel, nunc pro tunc to the Petition Date.
Prior to the entry of the Court order, the Debtors related that
the Office of the Unites States Trustee for the District of
Delaware contacted counsel to Klehr Harrison with informal
comments on the employment application. Counsel to the Debtors
has, accordingly, made revisions resolving the U.S. Trustee's
informal comment and submitted a revised proposed order, which
provides that Klehr Harrison will:
(a) advise and represent the Debtors with respect to their
rights, powers and duties under applicable non-bankruptcy
law pursuant to leases of real property; and
(b) advise and represent the Debtors with respect to their
rights, powers and duties related to any non-bankruptcy
law real estate issues that may arise in the Chapter 11
cases.
In a separate filing, Domenic E. Pacitti, Esq., a partner at
Klehr, Harrison, Harvey, Branzburg & Eller LLP, disclosed that
his firm has previously represented separate legal entities that
are or may be affiliates of Regio BDS, LLC, in matters wholly
unrelated to the Debtors. He further disclosed that certain
partners of Klehr Harrison may have immaterial investments in
investment funds in entities that may be affiliates of Regio, who
is the stalking horse bidder in the sale of substantially all of
the Debtors' assets.
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $538 million and liabilities of
$479 million in its bankruptcy filing.
(Boscov's Bankruptcy News; Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BOSCOV'S INC: Taps Quinn Emanuel as Conflicts Counsel
-----------------------------------------------------
Boscov's Inc. and its debtor affiliates seek the United States
Bankruptcy Court for the District of Delaware's authority to
employ Quinn Emanuel Urquhart & Hedges, LLP, as their special
conflicts counsel, nunc pro tunc to Sept. 17, 2008.
The Debtors relate that, pursuant to the engagement letter with
their lead bankruptcy counsel Jones day, they may use a separate
counsel in the event Jones Day is unable to represent them due to
a conflict of interest. Based on recent developments in their
bankruptcy cases, the Debtors have determined that it is
necessary to employ a conflicts counsel with respect to certain
matters.
Quinn Emanuel will represent the Debtors in connection with
matters in their Chapter 11 cases where Jones Day is unable to
represent the Debtors because of a conflict of interest.
Particularly, Quinn will be involved in the prosecution,
assertion or defense of any claim or cause of action that is
property of the Debtors' estate.
For its services, Quinn Emanuel will bill the Debtors according
to these customary rates:
Professional Position Hourly Rate
------------ -------- -----------
Richard I. Werder, Jr., Esq. Partner $950
Manisha Sheth, Esq. Counsel $650
McKenzie Anderson, Esq. Associate $320
Quinn Emanuel will also seek reimbursement of necessary out-of-
pocket expenses incurred in the performance of services to the
Debtors. The Debtors will provide Quinn Emanuel a $25,000
retainer upon Court approval of the employment application.
Richard I. Werder, Jr., a partner at Quinn Emanuel Urquhart &
Hedges, LLP, disclosed in an affidavit that in the last two
years, the firm has represented Bank of New York, General
Electric Capital Corporation, International Business Machines
Corporation, Silverpoint Capital Management, L.P., and Zurich
American. Mr. Werder, nevertheless, assures the Court that Quinn
Emanuel is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code, and as required by Section
327(a).
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $538 million and liabilities of
$479 million in its bankruptcy filing.
(Boscov's Bankruptcy News; Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BOSCOV'S INC: Court Moves All Assets' Sale Hearing to Nov. 5
------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
adjourned to Nov. 5, 2008, the hearing to consider approval of the
sale of substantially all of Boscov's Inc., and its debtor
affiliates' assets.
The Court was to convene a hearing on the Debtors' sale request on
Oct. 27, 2008, prior to the Nov. 5 adjournment.
During the sale hearing, the Court, according to Tribune-Democrat,
will have to choose bids from Versa Capital Management and the
partnership of retired chief executive officer Albert Boscov and
his brother-in-law, Edwin Lakin. Mr. Boscov confirmed that he
submitted a bid for the department store chain, according to an
October 16 report by Reading Eagle.
Mr. Boscov said a "lot of people are working with him on the bid."
However, he did not identify who those people are except for Edwin
Lakin, former president of the department store chain, Reading
Eagle said. "We're hoping to . . . keep the stores in the
family," Mr. Boscov told Reading Eagle.
Versa, through a newly created affiliate, Regio BDS, LLC, will
pay about $16,500,000 cash and assume the Debtors' liabilities
totaling more than $200,000,000. The value of the Boscov-Lakin
bid was not publicly disclosed, Reading Eagle said. Based on the
Court-approved bidding and sale procedures, the Boscov-Lakin bid
has to offer at least $4,250,000 higher than Regio/Versa's bid.
HSBC, BANA, and Lessors Object
HSBC Bank Nevada, N.A., Bank of America, N.A., and other parties-
in-interest filed separate objections to the proposed sale of the
Debtors' assets:
(a) HSBC Bank
HSBC, in a memorandum of law filed with the Court, points to
Section 365(c)(2) of the Bankruptcy Code as providing that a
contract obligating a party to make a loan, or extend other debt
financing or financial accommodations, for the benefit of the
debtor is a contract that the trustee or debtor may not assume or
assign.
HSBC objects to the Debtors' proposed assumption and assignment
of the Credit Card Program Agreement to the Purchaser. According
to HSBC, it has granted the Debtors a non-exclusive license to
use its intellectual property. Courts, HSBC asserts, have
consistently held that under federal law a debtor cannot, over
the licensor's objection, assume and assign a contract that
contains a non-exclusive license to use intellectual property.
In connection with HSBC's objection, the Debtors served a notice
to depose HSBC pursuant to Rule 30(b)(b)(6) of the Federal Rules
of Civil Procedures. The Debtors will take depositions of HSBC's
officers, directors, managing agents or other duly-designated
persons.
Recognizing the inevitability of disclosure of the Agreement and
of any confidential information relating to the proposed
assumption and assignment, the Debtors and HSBC want to ensure
that any information made available during discovery will not be
used for any purpose other than relating to the contested matter,
and will not be made public, or otherwise disseminated beyond the
extent necessary.
The parties, accordingly, enter into a stipulated protective
order providing procedures for the distribution and use of
confidential information.
Among others, the stipulation provides that all documents made
available for inspection will be deemed as confidential
information and may be disclosed to the Court; the law firms of
Loeb & Loeb, LLP, Drinker Biddle & Reath LLP, and Jeffrey
Middendorf of HSBC; and the law firms of Jones Day and Richards,
Layton and Finger, P.A., Dean Sheaffer and Michael Hughes of the
Debtors.
The Court approved the stipulation.
(b) Bank of America
BANA, with respect to the Debtors' proposed rejection of their
Merchant Agreement, emphasizes that it is at a significant risk
of loss if the Court approves the sale of the Debtors' assets as
a going concern without providing a funded cash reserve that will
protect BANA from risk of loss for chargebacks and returns that
will arise after the sale closing.
BANA also complains that the stalking horse proposed asset
purchase agreement was filed without schedules. The schedule of
assumed liabilities is omitted from the Stalking Horse APA. In
this light, BANA asks the Court to require the purchaser to post
a funded cash reserve as the Purchaser's adequate assurance of
future performance in an amount to be determined in BANA's sole
discretion, should the Court authorize the assumption and
assignment of the Merchant Agreement.
In a separate filing, BANA seeks the Court' authority to file
under seal the Merchant Agreement, which according to its
counsel, Craig Martin, Esq., at Edwards Angell Palmer & Dodge
LLP, in Wilmington, Delaware, reflects facts, circumstances and
information that are unique to relationship between BANA and the
Debtors, including details as to pricing, benefits, the parties'
obligations and timeframes under which rights and obligations are
to be fulfilled.
Mr. Craig maintains that the Merchant Agreement satisfies the
category of confidential or commercial information in Section
107(b)(1). "Indeed, such information is the type of confidential
commercial information that, if disclosed, would cause unfair
advantage to competitors by providing them information as to the
commercial operations of the debtor and of BANA," he says.
Unsealed copies of the Agreement will be made available only to
the Court, counsel to the Debtors, Office of the United States
Trustee for the District of Delaware, and counsel to the Official
Committee of Unsecured Creditors, BANA notes. At BANA's behest,
the Court will convene an expedited hearing to consider the
request.
(c) Rugs America Corp.
Rugs America Corp., is a party to a Department License Agreement
with the Debtors and to an addendum to that Agreement whereby the
Debtors acknowledged Rug America's right on rugs and other
related merchandise. Rugs America, who has filed a Uniform
Commercial Code financing statement evidencing its interest in
the Merchandise, notes that the Merchandise appears to be subject
to the terms of the Financing Motion and Sale.
To the extent that the Debtors are permitted to sell the
Merchandise without Rug America's specific consent, Rugs America
objects to the entry of that order. The Merchandise is not part
of the Debtors' inventory but remains as Rugs America's property
until the point of sale to a retail customer, Rugs America
emphasizes.
(d) Ritz Camera
Ritz Camera says it does not object to the Sale provided that the
proposed Sale Order does not assert that Ritz's Inventory are the
Debtors' property, and that the proposed order does not consider
Ritz's Inventory as part of the Debtors' assets.
(e) Landlords
Coventry Retail, LP, joined by the Macerich Company, asserts that
no sale hearing can go forward since the Debtors did not comply
with the bid procedures provision of providing Coventry with
adequate assurance of future performance information pursuant to
Section 365.
Coventry asserts it must receive the adequate information package
prior to the hearing on the assumption and assignment of their
leases. General Growth Properties, Inc., and Jones Lang LaSalle
Americas, Inc., in a joint objection say they have not received
information on adequate assurance either from the Debtors or the
Buyer. As a result, General and Jones Lang complain that they
are unable to asses the proposed assignee, conduct discovery or
file a meaningful objection to the proposed assignment.
Coventry also complains that although the Debtors filed a re-
notice, which changed the date of the Sale hearing, the Debtors
did not change any of the objection deadlines contained in the
Bidding Procedures Order.
(f) GSI Commerce and PR Plymouth
GSI Commerce Solutions, Inc., relates that pursuant to the Sale
Motion, Regio may designate any one or more executory contracts
as a "held contract" on which Regio may defer decision with
respect to designation for assumption and assignment until
March 2, 2009.
GSI complains that the provision is not only extremely
prejudicial to GSI, but could otherwise result in the estate
incurring an unnecessary and substantial expense claim until the
Purchaser determines whether it wishes to receive an assignment
of the Agreement.
In conjunction with the "held contracts" provision, PR Plymouth
Meeting Limited Partnership asserts that the proposed Sale Order
should be revised to clarify, among others, that pursuant to the
Operating Agreement between the Debtors and PR Plymouth, notice
must be provided to the non-debtor counterparty, of the Buyer's
election specifying any contract or lease as a held contract, and
notice of a request by the Buyer seeking assumption and
assignment of any held contract.
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $538 million and liabilities of
$479 million in its bankruptcy filing.
(Boscov's Bankruptcy News; Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BRIAN TUTTLE: Sec. 341 Meeting of Creditors Slated for Nov. 20
--------------------------------------------------------------
The United States Trustee of the U.S. Bankruptcy Court for the
Southern District of Florida will convene a meeting of creditors
in the bankruptcy case of Brian R. Tuttle and Merja A. Tuttle on
November 20, 2008, at 8:30 a.m. The meeting will be held at
Flagler Waterview Bldg., 1515 N Flagler Dr. Rm. 870, in West Palm
Beach, Florida.
This is the first meeting of creditors under Sec. 341(a) of the
Bankruptcy Code. A representative of the Debtor must be present
at the meeting to be questioned under oath by creditors.
Creditors are welcome to attend, but are not required to do so.
The meeting may be continued and concluded at a later date without
further notice.
Lorraine Adam, Deputy Clerk of Court, says the deadline for
parties-in-interest to file a proof of claim is February 18, 2009.
Governmental units have until April 19, 2009, to file proofs of
claim.
Brian R. Tuttle and Merja A. Tuttle of West Palm Beach, Florida,
are real estate developers. They filed for chapter 11 bankruptcy
on October 15, 2008, before the U.S. Bankruptcy Court for the
Southern District of Florida (Case No. 08-25253). Debtor-
affiliates that filed separate Chapter 11 petitions are Tuttle
Land Holding Corp. (Case No. 08-25255) and TLH-BOS Corp. Hyman
(Case No. 08-25256). Judge Paul G. Hyman Jr. presides over the
case. Robert C. Furr, Esq., at Furr & Cohen, serves as the
Debtors' bankruptcy counsel. When the Tuttles filed for
bankruptcy, they listed estimated assets between $50 million and
$100 million, and estimated debts between $10 million and $50
million.
On October 15, 2008, the Tuttles filed with the Court a chapter 11
statement of current monthly income, disclosing $18,333 in total
current monthly income, including $14,000 net monthly income from
business operations.
BROOKSIDE TECHNOLOGY: Names Chris Phillips to Board of Directors
----------------------------------------------------------------
Brookside Technology Holdings Corp. disclosed in a Securities and
Exchange Commission filing that on Oct. 22, 2008, Chris Phillips
was appointed to its board of directors, increasing the size of
the board of directors to three.
Mr. Phillips has been a managing director for Vicis Capital, LLC
since February 2008. From 2004 through January 2008, Mr. Phillips
served as President and CEO of Apogee Financial Investments, Inc.,
a merchant bank that owns 100% of Midtown Partners & Co., LLC, a
FINRA licensed broker-dealer. From 2000 through January 2008, he
also served as managing member of TotalCFO, LLC, which provides
consulting and CFO services to a number of public and private
companies and high net worth individuals. From November 2007
through January 2008 Mr. Phillips served as the CEO and Chief
Accounting Officer of OmniReliant Holdings, Inc.
Presently, he is a member of the Board of Directors OmniReliant
Holdings, Inc., Precision Aerospace Components, Inc. (OTCBB:
PAOS), The Amacore Group, Inc. (OTCBB: ACGI), MDwerks, Inc.
(OTCBB: MDWK), and a few private companies. Mr. Phillips received
a B.S. in Accounting and Finance and a Masters of Accountancy,
with a concentration in tax, both from the University of Florida.
Mr. Phillips is a Florida CPA.
Vicis Capital Master Fund, an affiliate of Vicis Capital, LLC, is
the company's largest preferred stockholder and one of its
creditors. In connection with the company\u2019s acquisition of
Standard Tel Networks, LLC, Vicis and the company entered into,
and closed upon, a Securities Purchase and Loan Conversion
Agreement, dated Sept. 23, 2008, pursuant to which the Company, in
full satisfaction of the prior sums owed to Vicis:
-- paid $2,250,000 in cash to Vicis;
-- delivered to Vicis a subordinated note in the principal
amount of $1,500,000, bearing interest at 10% and maturing
on April 15, 2010; and
-- converted the balance of the debt owed to Vicis, including
all accrued interest of $676,384, in the combined aggregate
amount of $5,026,384, into 5,026,384 shares of the
company's Series A Convertible Preferred Stock.
Vicis also owns warrants to purchase 336,353,835 shares of the
company's common stock.
About Brookside Technology
Based in Clearwater, Florida, Brookside Technology Holdings Corp.
(OTC BB: BKSD) -- http://www.brooksideus.com/-- is a holding
company for Brookside Technology Partners Inc., a Texas
corporation, and US Voice & Data LLC, an Indiana limited liability
company, and all operations are conducted through those two wholly
owned subsidiaries.
Headquartered in Austin, Texas, Brookside Technology Partners is a
provider and global managed service company specializing in
selling, designing, analyzing and implementing converged Voice
over IP (VoIP), data and wireless business communications systems
and solutions for commercial and state/government organizations of
all types and sizes in the United States.
Headquartered in Louisville, Kentucky, USVD is a regional provider
of telecommunication services including planning, design,
installation and maintenance for the converged voice and data
systems. USVD serves the Kentucky and southern Indiana markets,
operating out of offices in Louisville, Lexington and
Indianapolis.
Going Concern Doubt
Brookside Technology Holdings Corp. says its current and past
losses raise doubt about the company's ability to continue as a
going concern.
The company's balance sheet as of June 30, 2008, showed
$18,239,142 in total assets, $18,243,852 in total liabilities,
resulting to $4,710 in shareholders' deficit. At June 30, 2008,
the company's consolidated balance sheet also showed strained
liquidity with $4,420,853 in total current assets available to pay
$17,199,245 in total current liabilities.
The company has incurred net losses during the first six months of
2008, and the years ended Dece. 31, 2007 and 2006. As of June 30,
2008 the company has a retained deficit of $13,304,403.
As of June 30, 2008 the company was in default on its debt to
Hilco of $6,649,423 and the Series B Preferred Stock, which is
classified as a liability on the balance sheet, as discussed in
Note 3, has matured in the amount of $3,000,000. Vicis has agreed
to waive the default on the Hilco note, and to reduce the interest
rate from 15% to 10%.
BUFFETS HOLDINGS: Files Plan of Reorganization
----------------------------------------------
Buffets Holdings, Inc. filed its proposed Plan of Reorganization
and related Disclosure Statement with the U.S. Bankruptcy Court
for the District of Delaware on October 30, 2008.
The key elements of the Plan include:
-- Holders of the Company's prepetition senior secured loans
will receive, in aggregate, from 93.7% to 96.1% of the
newly issued common stock in the reorganized company upon
its emergence from Chapter 11.
-- Holders of senior notes and deficiency claims related to
the prepetition senior secured loans will receive, in
aggregate, from 3.3% to 5.3% of the newly issued common
stock.
-- Holders of general unsecured claims will receive, in
aggregate, from 0.6% to 1.0% of the newly issued common
stock. The estimated recovery for general unsecured claims
is expected to be between 1.9% and 3.1% of allowed claims.
-- Holders of general unsecured claims of $25,000 or less can
participate in a convenience class in which they will
receive cash equal to 8% of their allowed claims. Holders
of general unsecured claims of greater than $25,000 can
elect to reduce their allowed claim to $25,000 so that they
can participate in the convenience class.
-- The Company's current common stock and warrants will be
extinguished upon its emergence from Chapter 11.
-- It is anticipated that the reorganized company will emerge
from bankruptcy as a privately held enterprise, with an
initial board of directors comprised of five directors,
four of whom will be designated by the Company's
prepetition lenders. Current CEO Mike Andrews will
continue to serve as a director.
The Disclosure Statement also includes information about financial
estimates regarding the Company's reorganized business enterprise
value, and a description of the events leading up to and during
Buffets Holdings' Chapter 11 cases.
With the filing of the Plan, Buffets Holdings is positioned to
emerge from Chapter 11 protection during the first quarter of
calendar 2009, with a stronger balance sheet, significantly less
debt and greater resources to operate effectively and invest in
its business, according to a statement released by the company.
Having now filed its Plan of Reorganization, the statement says,
Buffets Holdings will focus on securing exit financing to replace
its Debtor-in-Possession financing when the Company emerges from
Chapter 11 and to provide future working capital.
The Plan provides for the Company's existing lenders to become
significant shareholders of the Company upon emergence.
"The filing of our Plan of Reorganization and Disclosure Statement
marks a substantial achievement in the Chapter 11 process," said
Mike Andrews, Chief Executive Officer of Buffets Holdings. "We
believe that all of the parties involved will agree that the
proposed Plan is a fair and reasonable settlement and compromise
of all outstanding issues and provides the best opportunity for
maximum recoveries for creditors."
"When we emerge from bankruptcy, Buffets Holdings will be stronger
and more financially secure," he continued. "We will have
substantially less debt and the right level of resources to
operate effectively and make investments that ensure we can
continue to deliver the highest quality food, service, and value
to our guests."
Mr. Andrews concluded, "I want to thank our Team Members for their
hard work and steady support during this process. Because of
their dedication to the Company, we have been able to continue
providing outstanding meals and service to our guests, and are now
well-positioned to succeed in the future. I would also like to
express our appreciation for the continued loyalty of our valued
customers, suppliers and business partners."
Over the past several months, Buffets Holdings has focused its
efforts on right-sizing the organization, including streamlining
its portfolio of restaurants and reducing operating expenses
across the business.
About Buffets Holdings
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc., which operates 626 restaurants in 39 states, comprised of
615 steak-buffet restaurants and eleven Tahoe Joe's Famous
Steakhouse restaurants, and franchises sixteen steak-buffet
restaurants in six states. The restaurants are principally
operated under the Old Country Buffet, HomeTown Buffet, Ryan's and
Fire Mountain brands. Buffets, Inc. employs approximately 37,000
team members and serves approximately 200 million customers
annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., M. Blake Cleary, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as claims and balloting
agent. The U.S Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Otterbourg Steindler Houston & Rosen PC and
Pachulski Stang Ziehl Young &Jones as counsels. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of $85
million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CASTLE HILL: Fitch Cuts Rating on $26.5MM Class C-1 Notes to 'CCC'
------------------------------------------------------------------
Fitch Ratings affirmed two and downgraded two classes of notes
issued by Castle Hill III CLO, Ltd./Inc. as:
-- $90,000,000 class A-1a notes affirmed at 'AAA' and 'F1+'
withdrawn;
-- $142,500,000 class A-1b notes affirmed at 'AAA';
-- $30,000,000 class B notes downgraded to 'BBB' from 'A';
-- $26,500,000 class C-1 notes downgraded to 'CCC' from 'BBB'.
Castle Hill III is a cash flow collateralized loan obligation that
closed Aug. 19, 2003 and is managed by Sankaty Advisors, LLC. The
reinvestment period ended on Sept. 15, 2008. Castle Hill III has
a portfolio composed of 93.5% senior secured loans and bonds, 5.5%
second lien loans and 1% senior unsecured loans.
The class A-1a and A-1b notes are affirmed due to their senior
position in the capital structure. The credit enhancement
provided by the subordinate tranches and excess spread decreases
the class A notes' exposure to the riskier securities in the
portfolio. Additionally, the class A notes will begin to amortize
on the next payment date in December 2008. Further, the class A-
1a notes are insured by Financial Security Assurance Inc. (IFS
rated 'AAA' and on Rating Watch Negative by Fitch). The 'F1+'
short-term rating on the class A-1a notes is withdrawn because the
liquidity agreement with Deutsche Bank was terminated.
The downgrades to the class B and C-1 notes are due to negative
credit migration in the portfolio. The trustee reported Fitch
weighted average rating factor appears to have improved marginally
to 'B+/B', according to the Sept. 30, 2008 report, from 'B', based
on the July 31, 2006 report used in Fitch's last review in
September 2006. However, this calculation does not include
defaulted securities, which have increased to 2.3% of the
portfolio from 0%. Approximately 7.8% of the performing portfolio
is considered to be rated 'CCC+' or lower.
Additionally, 10.5% and 28.6% is on Rating Watch Negative or has a
Negative Outlook, respectively, by one of the rating agencies,
which was factored into the analysis by making standard
adjustments as described in Fitch's updated corporate
collateralized debt obligation criteria. Though the
overcollateralization ratios continue to pass and have increased
marginally for each class of notes due to asset purchases, the
credit quality of the portfolio has deteriorated, which outweighs
the benefit of the additional credit enhancement to the class B
and C-1 notes.
The rating of the class A notes addresses the likelihood that
investors will receive full and timely payments of interest, as
per the transaction's governing documents, as well as the
aggregate outstanding amount of principal by the stated maturity
date. The ratings on classes B and C-1 address the likelihood
that investors will receive ultimate interest payments, as per the
transaction's governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date.
Fitch reviewed this transaction in accordance with its updated
criteria released on April 30, 2008 for corporate CDOs. At that
time, Fitch noted it would be reviewing its ratings accordingly to
establish consistency for existing and new transactions. As part
of this review, Fitch makes standard adjustments for any names on
Rating Watch Negative or with a Negative Outlook, reducing such
ratings for default analysis purposes by two notches and one
notch, respectively.
CHRYSLER LLC: Half of Assembly Lines Could Close in GM Merger
-------------------------------------------------------------
Neal E. Boudette and John D. Stoll at The Wall Street Journal
report that Grant Thornton LLP auto-industry consultant, Kimberly
Rodriguez, said that much of Chrysler LLC would disappear in a
merger with General Motors Corp. Chrysler could close seven of
its 14 asembly plants and eliminate 19 of its 26 car and truck
lines due to the merger, WSJ says, citing a study released
Thursday by Grant Thornton. The study indicates that about 30,000
to 40,000 of Chrysler's 66,000 workers would be laid off, and an
additional 50,000 jobs at suppliers and other companies would be
affected.
According to WSJ, Ms. Rodriguez warned that the impact on jobs and
the economy would be worse without a deal. A merger would be "in
the interest of the shareholders, the workers, the U.S.
government, all the stakeholders. The alternative would be
bankruptcy for Chrysler," the report says, citing Patrick Anderson
-- a consultant and founder of Anderson Economic Group.
Cerberus Capital Management LP and General Motors Corp. are in
talks of a possible merger between the two automakers. According
to published reports, in that deal, GM would take over Chrysler,
which is majority-owned by Cerberus, and Cerberus would have a
much larger stake in GM's GMAC LLC. Cerberus currently owns 51%
of GMAC.
Mr. Stoll and Jeff Bennett at The Wall Street Journal report that
a group of six governors -- Michigan, Delaware, Kentucky, New
York, Ohio and South Dakota -- sent a letter to Treasury Secretary
Henry Paulson and Federal Reserve Chairperson Ben Bernanke on
Wednesday, asking government officials to work under the
provisions of the Emergency Economic Stabilization Act to aid the
auto industry.
According to WSJ, Michigan Gov. Jennifer Granholm, is willing to
support a request for federal assistance for the GM-Chrysler
merger, if the companies ask for it. The report says that Gov.
Granholm said, "We are in touch with GM and Chrysler all the time
and we want to be partners in these discussions we are having."
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of
US$191.6 billion, and total stockholders' deficit of
US$56.9 billion. For the quarter ended June 30, 2008, the company
reported a net loss of US$15.4 billion over net sales and revenue
of US$38.1 billion, compared to a net income of US$891.0 million
over net sales and revenue of US$46.6 billion for the same period
last year.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CMT AMERICA: Court Converts Case to Chapter 7 Liquidation
---------------------------------------------------------
The Hon. Christopher S. Sontchi of the United States Bankruptcy
Court for the District of Delaware converted the Chapter 11 case
of CMT America Corp. to a Chapter 7 liquidation proceeding.
The Debtor told the Court it has liquidated most of its assets,
terminated any remaining business operations, and there is no
reasonable likelihood of its rehabilitation.
Deadline for application for compensation of professionals
retained in the case is Dec. 1, 2008. A hearing is set for Dec.
22, 2008, at 10:30 a.m., to consider the application.
Headquartered in Farmington, Connecticut, CMT America Corp., aka
Fairvane Corp., is a 70-store women's clothing retailer. The
company filed for chapter 11 protection on July 13, 2008 (Bankr.
D. Del. Case No.08-11434). Edmon L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP, represents the Debtor in its
restructuring efforts. The Debtor selected Administar Services
Group LL as its claims agent. The U.S. Trustee for Region 2 has
appointed five creditors to serve on Official Committee of
Unsecured Creditors. The Debtor's summary of schedules posted
total assets of $9,651,473 and total debts of $20,352,990.
COBALT CMBS: Fitch Cuts Rating on Six Certs. Classes to Low-B
-------------------------------------------------------------
Fitch Ratings has downgraded and assigned Rating Outlooks for
seven classes of Cobalt CMBS Commercial Mortgage Trust, Series
2007-C2, commercial mortgage pass-through certificates as:
-- $24.2 million class J to 'BBB-' from 'BBB'; Outlook Negative;
-- $30.2 million class K to 'BB+' from 'BBB-'; Outlook Negative;
-- $12.1 million class L to 'BB' from 'BB+'; Outlook Negative;
-- $3 million class M to 'BB-' from 'BB'; Outlook Negative;
-- $9.1 million class N to 'B+' from 'BB-'; Outlook Negative;
-- $6 million class O to 'B' from 'B+'; Outlook Negative;
-- $3 million class P to 'B-' from 'B'; Outlook Negative.
In addition, Fitch has affirmed and assigned Rating Outlooks to
these classes:
-- $30.7 million class A-1 at 'AAA'; Outlook Stable;
-- $241.1 million class A-2 at 'AAA'; Outlook Stable;
-- $71.9 million class A-AB at 'AAA'; Outlook Stable;
-- $857.5 million class A-3 at 'AAA'; Outlook Stable;
-- $485.5 million class A-1A at 'AAA'; Outlook Stable;
-- $221.9 million class A-MFX at 'AAA'; Outlook Stable;
-- $20 million class A-MFL at 'AAA'; Outlook Stable;
-- $102.6 million class A-JFX at 'AAA'; Outlook Stable;
-- $100 million class A-JFL at 'AAA'; Outlook Stable;
-- Interest-only class X at 'AAA'; Outlook Stable;
-- $21.2 million class B at 'AA+'; Outlook Stable;
-- $27.2 million class C at 'AA'; Outlook Stable;
-- $21.2 million class D at 'AA-'; Outlook Stable;
-- $15.1 million class E at 'A+'; Outlook Stable;
-- $18.1 million class F at 'A'; Outlook Stable;
-- $30.2 million class G at 'A-'; Outlook Stable;
-- $24.2 million class H at 'BBB+'; Outlook Negative;
-- $6 million class Q at 'B-'; Outlook Negative.
Fitch does not rate the $30.2 million class S.
The downgrades of classes J through P are the result of the
lowering of shadow rating on the transaction's largest loan, Peter
Cooper Village and Stuyvesant Town (10.4%) to below investment
grade.
The loan, which had a 'BBB-' shadow rating at issuance, is no
longer considered investment grade. At issuance, the loan's
proceeds were allocated to 'BBB-' and above, while they are now
allocated to all classes in the capital structure. This results
in higher credit enhancement requirements. While the current net
cash flow is not sufficient to meet the debt service obligations,
due to the sufficient amount of remaining interest reserves
($161.2 million) and the continued conversion of units to market
rental rates from stabilized rental rates, Fitch does not expect a
default of the loan in the near term.
However, the pace of the unit conversions does not meet
expectations at issuance and rental rates are less likely to
increase given the current economic conditions. Fitch's estimates
of future net cash flow, based on reduced conversion rates and
reduced year-over-year increases to market rental rates, no longer
support an investment grade rating. The borrower, Tishman Speyer
Properties, LP and Blackrock Realty acquired the property with the
intent to convert rent stabilized units to market rents as tenants
vacated the property, resulting in increased rental revenue. As
of June 2008 there are 3,543 market units and 7,210 rent
stabilized units, with vacancy of 4.2%.
There have been no specially serviced loans since issuance. Fitch
has identified 13 loans (7%) as Loans of Concern. The largest
Fitch Loan of Concern (1.7%) is secured by the Westin - Ft.
Lauderdale, Florida. The property is suffering from a weak
market, especially among the transient segment. The borrower
expects the year's revenue to be nearly $2.0 million lower than
the amount budgeted.
There are six shadow rated loans within the transaction (5.4%).
The largest is Ala Moana center (4.1%). The Ala Moana Portfolio is
secured by the fee interest in a 1.9 million sf retail and office
development in Honolulu, Hawaii. Ala Moana Center is one of the
most productive retail assets in the nation, with sales for in-
line tenants consistently exceeding $1,000 per square foot. The
retail portion of the collateral is occupied by nearly 275
tenants, while the office portion is occupied by 184 tenants. The
mall is sponsored and operated by General Growth Properties.
Occupancy as of June 2008 was 96%, in line with issuance. The
loan is interest-only with a coupon of 5.52% and a maturity date
in 2011.
The fifth largest shadow rated loan, Highland Orchard Apartments
Cove Apartments (0.2%), reported an 18% decrease in net cash flow
for the first half of 2008 as compared to at issuance. The loan
is secured by a multifamily property in Conyers, Georgia, and is
being repositioned in order to increase rents over the loan term.
Base rental income is consistent with issuance, but expense ratio
has increased due to costs associated with the repositioning. All
of the loans maintain investment grade shadow ratings.
As of the September 2008 distribution date, the transaction has
paid down by 0.29% to $2.413 billion from $2.419 billion at
issuance. Rating Outlooks reflect the likely direction of any
rating changes over the next one to two years.
COMM 2004-LNB3: Moody's Lowers Ratings on Four Certificate Classes
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of two classes,
downgraded four classes and affirmed 13 classes of COMM 2004-LNB3,
Commercial Mortgage Pass-Through Certificates as:
-- Class A-2, $92,243,021, affirmed at Aaa
-- Class A-3, $104,606,000, affirmed at Aaa
-- Class A-4, $114,956,000, affirmed at Aaa
-- Class A-5, $502,796,000, affirmed at Aaa
-- Class A-1A, $234,062,343, affirmed at Aaa
-- Class X, Notional, affirmed at Aaa
-- Class B, $40,063,000, upgraded to Aaa from Aa2
-- Class C, $16,692,000, upgraded to Aa2 from Aa3
-- Class D, $28,378,000, affirmed at A2
-- Class E, $25,039,000, affirmed at A3
-- Class F, $15,023,000, affirmed at Baa1
-- Class G, $13,354,000, affirmed at Baa2
-- Class H, $11,685,000, affirmed at Baa3
-- Class J, $11,685,000, affirmed at Ba1
-- Class K, $6,677,000, affirmed at Ba2
-- Class L, $3,339,000, downgraded to B1 from Ba3
-- Class M, $5,008,000, downgraded to B2 from B1
-- Class N, $5,007,000, downgraded to Caa1 from B2
-- Class O, $5,008,000, downgraded to Caa2 from B3
Moody's upgraded Classes B and C due to overall stable pool
performance, increased credit enhancement and increased
defeasance. Moody's downgraded Classes L, M, N and O due to
estimated losses from a specially serviced loan and increased
dispersion.
As of the October 10, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 8% to
$1.25 billion from $1.33 billion at securitization. The
Certificates are collateralized by 94 mortgage loans ranging in
size from less than 1% to 10% of the pool with the top 10 conduit
loans representing 50% of the pool. The pool includes five loans,
representing 32% of the pool, with investment grade underlying
ratings. Fourteen loans, representing 23% of the current
outstanding pool balance, have defeased and are collateralized by
U.S. Government securities.
The trust has not experienced any realized losses since
securitization. There is currently one loan, representing 2% of
the pool, in special servicing. The loan is secured by a 60%
occupied office building located in Franklin Township, New Jersey.
Leases for approximately 53% of the premises expire by September
2010 and the property has significant deferred maintenance.
Moody's is estimating a $12.3 million loss from this loan.
Fourteen loans, representing 23% of the pool, are on the master
servicer's watchlist. The watchlist includes loans which meet
certain portfolio review guidelines established as part of the
Commercial Mortgage Securities Association's monthly reporting
package. As part of Moody's ongoing monitoring of a transaction,
Moody's reviews the watchlist to assess which loans have material
issues that could impact performance.
Moody's was provided with full-year 2007 operating results for 85%
of the pool. Moody's loan to value ratio for the conduit
component is 94%, essentially the same as at Moody's prior full
review in January 2007, and 97% at securitization. Although the
overall pool performance has been stable, LTV dispersion has
increased since securitization. Based on Moody's analysis, 8% of
the conduit pool has an LTV in excess of 120% compared to 1% at
last review and 0% at securitization.
The largest loan with an underlying rating is the Garden State
Plaza Loan ($130.0 million -- 10.4%), which represents a 25% pari-
passu interest in a first mortgage loan. The loan is secured by
the borrower's interest in a 2.0 million square foot super-
regional mall located in Paramus, New Jersey. The mall is
anchored by Macy's, Nordstrom, J.C. Penney, Neiman Marcus and Lord
and Taylor. The in-line space was 96% leased as of July 2008
compared to 99% at last review. In 2007, a 149,000 square foot
expansion was completed consisting of a 99,000 square foot cinema
complex and 35,000 square feet of new in-line mall shop space.
The loan is interest only for its entire 10-year term. The loan
sponsors are Westfield America Inc. and affiliates of Prudential
Assurance Co. Ltd. Moody's current underlying rating is A1
compared to A2 at last review.
The second loan with an underlying rating is the 731 Lexington
Avenue Loan ($115.2 million -- 9.2%), which represents a 40% pari-
passu interest in a first mortgage loan. The loan is secured by a
694,000 square foot office condominium which is part of a 1.4
million square foot complex located in midtown Manhattan. The
condominium is 100.0% leased to Bloomberg, LP through March 2028.
The loan sponsor is Vornado Realty Trust. Moody's current
underlying rating is A3, the same as at last review.
The third loan with an underlying rating is the DDR Portfolio Loan
($75.0 million -- 6.0%), which represents a 35% pari-passu
interest in a first mortgage loan. The loan is secured by a
portfolio of 20 retail properties totaling 3.3 million square feet
located in New York, Minnesota, Pennsylvania, Arizona, North
Carolina and Tennessee. The portfolio's performance is in line
with original expectations. The loan is interest only for its
entire 10-year term. Moody's current underlying rating is Baa2,
the same as at securitization.
The fourth loan with an underlying rating is the Tysons Corner
Center Loan ($60.1 million - 4.8%), which represents an 18% pari-
passu interest in a first mortgage loan. The loan is secured by
the borrower's interest in a 2.0 million square foot regional mall
located in McLean, Virginia. The mall is anchored by
Bloomingdales, Macy's, Nordstrom and Lord & Taylor. The in-line
tenant space was 97% occupied as of December 2007 compared to 94%
at securitization. The property's financial performance has
improved since securitization due to additional rental income from
a 265,000 square foot renovation/expansion completed in 2007.
Moody's current underlying rating is Aaa compared to Aa1 at last
review.
The fifth loan with an underlying rating is the AFR Portfolio Loan
($13.3 million -- 1.1%), which represents a 6% pari-passu interest
in a first mortgage loan. The loan is secured by 125 office,
operation centers and retail bank branches located in 17 states.
At securitization, the loan was secured by 152 properties totaling
7.7 million square feet, however eight properties have been
released from the pool and 19 properties defeased. Due to
property releases, defeasance and loan amortization the loan
amount has decreased by approximately 33% since securitization.
The loan sponsors are American Financial Realty Trust and First
States Group LP. Moody's current underlying rating is A1, the
same as at last review.
The top three non-defeased conduit loans represent 11.1% of the
pool. The largest conduit loan is the Centreville Square Loan
($60.0 million -- 4.7%), which is secured by a 312,000 square foot
grocery store anchored retail center located in suburban
Washington D.C. in Centreville, Virginia. The center was 95%
leased as of March 2008 compared to 97% at last review. Anchor
tenants include Shoppers Food-Grand Mart (15% GLA; lease
expiration April 2013) and Legacy Furniture (8%; lease expiration
October 2011). Moody's LTV is 90% compared to 93% at last review.
The second largest conduit loan is the Beaver Valley Loan
($40.2 million -- 3.3%), which is secured by a 263,000 square foot
office building located in suburban Wilmington, Delaware. The
property is 100% occupied by American International Insurance
Company (senior unsecured rating of parent company, American
International Group -- A3; on review for possible downgrade)
through January 2015. The lease expiration is coterminous with
the loan maturity and therefore the property will be exposed to
significant rollover risk at loan maturity. Moody's LTV is 90%
compared to 83% at last review.
The third largest conduit loan is the Stonegate Oklahoma Loan
($37.5 million -- 2.8%), which is secured by two suburban office
buildings located in Birmingham, Alabama and Oklahoma City,
Oklahoma. The two buildings total 476,000 square feet and are
100% occupied. Moody's LTV is 92%, compared to 91% at last
review.
Moody's periodically completes full reviews in addition to
monitoring transactions on a monthly basis. Moody's prior full
review is summarized in a press release dated January 24, 2007.
Moody's has published rating methodologies outlining its
analytical approach to surveillance and its approach to rating
conduit and fusion transactions. In addition, Moody's has
published numerous articles outlining its ratings approach to the
various property types customarily deposited within these
transactions along with other articles on credit issues unique to
CMBS. The major rating methodologies employed in analyzing this
transaction include:
CMBS: Moody's Approach to Surveillance, September 30, 2002 -- this
paper provides an overview of Moody's surveillance philosophy, an
indication of what prompts a conduit review, how conduit and large
loan monitoring is performed, and what its objectives are with
respect to post-closing requests and servicer reviews;
CMBS: Moody's Approach to Rating U.S. Conduit Transactions,
September 15, 2000 -- this paper provides an overview of rating
methodology and process with details on property level analysis,
loan level analysis, legal and structural characteristics, and
portfolio characteristics with supplementary information on legal
issues, a research summary, helpful information for commercial
real estate transactions, capitalization rates, and guidelines for
capital reserves; and
US CMBS: Moody's Approach to Rating Fusion Transactions, April 19,
2005 -- this paper discusses the key ratings factors for fusion
deals, value drivers for office and retail properties, valuation
and cap rate issues, property type volatility, Moody's large loan
tranching methodology, and an assessment of subordination levels.
COMMUNICATION INTELLIGENCE: Post $755K Net Loss for September 2008
------------------------------------------------------------------
Communication Intelligence Corporation reported $755,000 net loss
on total revenues of $721,000 for the three months ended Sept. 30,
2008, compared to $1,105,000 net loss on total revenues of
$456,000 for the same period a year ago.
The company's condensed consolidated balance sheet at Sept. 30,
2008, showed $7,188,000 in total assets, $1,065 in total current
liabilities, and $2,683,000 in long-term debt resulting in a
$3,370 stockholders' equity.
The company also had $93,979,000 in accumulated deficit.
Full-text copy of Communication Intelligence's quarterly results
is available free of charge at:
http://researcharchives.com/t/s?345f
Going Concern Doubt
According to the Troubled Company Reporter on May 26, 2008,
Denver-based GHP Horwath, P.C., raised substantial doubt on the
ability of the company to continue as a going concern after it
audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor pointed to the company's significant
recurring operating losses and accumulated deficit.
A full-text copy of the company's regulatory filing is available
for free at http://ResearchArchives.com/t/s?345f
About Communication Intelligence
Founded in 1981 and headquartered in Redwood Shores, Calif.,
Communication Intelligence Corporation (OTC BB: CICI.OB) --
http://www.cic.com/-- and its joint venture, Communication
Intelligence Computer Corporation, develops and markets electronic
signature solutions and biometric signature verification for
business process automation in the financial industry worldwide.
The company also supplies natural input/text entry software for
handheld computers and smartphones. It supplies its core
technologies in two categories, Transaction and Communication
Enabling Technologies, and Natural Input Technologies. The
company's products include SignatureOne, iSign, and Jot multi-
lingual handwriting recognition software.
CONSTAR INT'L: Has Until March 2009 to Regain Value Threshold
-------------------------------------------------------------
Constar International Inc. disclosed in a Securities and Exchange
Commission filing that on Oct. 22, 2008, it was given notice by
the NASDAQ Stock Market that NASDAQ has suspended enforcement of
its bid price and market value of publicly held shares
requirements through Friday, Jan. 16, 2009.
In that regard, on Oct. 16, 2008, NASDAQ filed an immediately
effective rule change with the Securities and Exchange Commission
to implement the suspension. All companies presently in a bid
price or market value of publicly held shares compliance period
will remain at that same stage of the process and will not be
subject to being delisted for these concerns.
As a result, the company's deadline to regain compliance with
Marketplace Rule 4450(b)(3), which requires a minimum market value
of publicly held shares of $15 million, is extended until
March 16, 2009.
Philadelphia-based Constar International Inc. (Nasdaq: CNST) --
http://www.constar.net/-- is a producer of polyethylene
terephthalate plastic containers for food, soft drinks and water.
The company provides full-service packaging solutions, from
product design and engineering, to ongoing customer support. Its
customers include many of the world's leading branded consumer
products companies.
At June 30, 2008, the company 's balance sheet showed total assets
of $507.0 million and total liabilities of $588.4 million,
resulting in a shareholder's deficit of $81.4 million.
* * *
Constar International Inc. still carries Moody's Caa2 Senior
Subordinate Debt assigned on Sept. 11, 2006.
CREDIT SUISSE: Fitch Cuts Ratings on Nine Certificate Classes
-------------------------------------------------------------
Fitch Ratings downgraded nine classes of Credit Suisse Commercial
Mortgage Trust, series 2007-C1 commercial mortgage pass-through
certificates and assigns Rating Outlooks as:
-- $33.7 million class J to 'BBB-' from 'BBB'; Outlook Negative;
-- $37.9 million class K to 'BB' from 'BBB-'; Outlook Negative;
-- $8.4 million class L to 'BB-' from 'BB+'; Outlook Negative;
-- $12.6 million class M to 'B+' from 'BB'; Outlook Negative;
-- $8.4 million class N to 'B' from 'BB-'; Outlook Negative;
-- $8.4 million class O to 'B-' from 'B+'; Outlook Negative;
-- $8.4 million class P to 'B-' from 'B'; Outlook Negative;
-- $8.4 million class Q to 'CCC/DR1' from 'B-';
-- $12.6 million class S to 'CC/DR2' from 'CCC'.
In addition, Fitch has affirmed and assigns Outlooks to these
classes:
-- $30.4 million class A-1 at 'AAA'; Outlook Stable;
-- $139.0 million class A-2 at 'AAA'; Outlook Stable;
-- $98.3 million class A-AB at 'AAA'; Outlook Stable;
-- $758.0 million class A-3 at 'AAA'; Outlook Stable;
-- $1.3 billion class A-1A at 'AAA'; Outlook Stable
-- $3.0 billion interest-only class A-SP at 'AAA'; Outlook
Stable;
-- $3.4 billion interest-only class A-X at 'AAA'; Outlook
Stable;
-- $125.0 million class A-MFL at 'AAA'; Outlook Stable;
-- $212.1 million class A-M at 'AAA'; Outlook Stable;
-- $286.6 million class A-J at 'AAA'; Outlook Stable;
-- $25.3 million class B at 'AA+'; Outlook Stable;
-- $37.9 million class C at 'AA'; Outlook Stable;
-- $33.7 million class D at 'AA-'; Outlook Stable;
-- $21.1 million class E at 'A+'; Outlook Negative;
-- $29.5 million class F at 'A'; Outlook Negative;
-- $33.7 million class G at 'A-'; Outlook Negative;
-- $37.9 million class H at 'BBB+'; Outlook Negative.
Fitch does not rate class T.
The downgrades are the result of expected losses on five (1.7%) of
the seven (2.0%) specially serviced loans in the transaction.
Classes E through P have been assigned Negative Outlooks due to
the potential future decline in credit enhancement in connection
with an increased number of Fitch loans of concern (15.4%). The
Rating Outlooks reflect likely rating changes over the next one to
two years.
As of the October 2008 distribution date, the transaction has paid
down 0.4%, to $3.36 billion from $3.37 billion at issuance. No
principal losses have been recorded to date.
There are seven specially serviced loans (2.0%). The largest
specially serviced loan (0.8%) is secured by a 504-bed student
housing property located in Fort Myers, Florida. The loan
transferred to the special servicer June 13, 2008 upon written
request from the borrower for relief due to low occupancy. As of
Sept. 4, 2008 the property was 70.4% leased, with deep concessions
offered during the pre-leasing season for the 2008-2009 school
year. This compares to occupancy of 99.0% at issuance. At year-
end 2007, the servicer-reported debt service coverage ratio was
0.73 times. The special servicer is reportedly negotiating a
forbearance agreement with the borrower to allow the borrower an
opportunity to sell the property. A foreclosure complaint was
also filed in July 2008.
The second largest specially serviced asset (0.3%) is secured by a
276-unit multifamily property located in Dallas, Texas. The loan
transferred to the special servicer July 11, 2008. The property's
reported occupancy is 51%, and the year-end 2007 servicer-reported
DSCR was 0.43x. The special servicer is continuing to evaluate
disposition strategies.
Collateral for the third largest specially serviced loan (0.2%) is
a 258 unit multifamily property located in Columbus, Ohio. The
loan transferred to special servicing Oct. 5, 2007 due to monetary
default. A foreclosure sale was scheduled for Oct. 17, 2008. Of
the remaining four specially serviced loans (0.6%), Fitch expects
losses on two (0.3%), both of which are in various stages of
foreclosure.
Fitch has identified 27 loans (15.4%) as Fitch loans of concern.
The largest loan of concern (6.1%) is secured by Savoy Park, a
1,802 unit multifamily complex located in the Harlem submarket of
New York. At issuance, 90.7% of the units were rent stabilized,
and the sponsor sought to improve property performance by bringing
stabilized units to market rents, performing common area and unit-
specific renovations, and sub-metering the property in order to
pass through utility expenses to the tenants. The servicer-
reported year-end DSCR was 0.36x, with occupancy of 95.5%. Based
on a mid-year rent roll and operating statements, year two
revenues generated by the property are in line with Fitch's
expectations; however, expenses are significantly higher than
expected.
This is partly because the sub-metering project anticipated at
issuance has not yet commenced. With an anticipated completion
time of 12-18 months, any benefits from the project are unlikely
to be seen prior to 2010 or 2011. As of the October remittance
date, approximately $28.6 million of reserves remain available,
including approximately $23.6 million for renovations and
$5.0 million for debt service. When the debt service reserve is
drawn below $2.0 million, the borrower will be responsible for
replenishing the reserve to $10.0 million, a requirement which
will be in effect until the trailing-six month DSCR is at least
1.00x for three consecutive months.
The second largest Fitch loan of concern (1.6%) is collateralized
by a 241 room hotel located in Indianapolis, Indiana. The loan
represents a construction take-out, and underwritten performance
was based largely on the appraiser's determination of prevailing
market revenues and expenses. To date, the property has
underperformed expectations, with a servicer-reported year-end
2007 DSCR of 0.84x and occupancy of 60.3%. Fitch notes that
approximately $1.3 million of reserves remain, and a cash equity
contribution of approximately $36.5 million (39.9%) was made by
the borrower at issuance.
No other loan of concern represents more than 1.0% of the pool.
Fitch loans of concern include the specially serviced loans
(2.0%), loans with DSCRs below 1.0x, loans with Fitch stressed
loan-to-value ratios of greater than 100%, and loans which have
failed to meet budgeted performance underwritten at issuance.
Approximately 54% of the pool consists of interest-only loans. An
additional 30% of the pool consists of loans with an interest-only
period prior to commencement of amortization. None of the loans
mature in 2008, 2009, or 2010.
CREDIT SUISSE: Moody's Junks Rating on $2.295MM Class N Certs.
--------------------------------------------------------------
Moody's Investors Service upgraded the rating of one class,
downgraded two classes and affirmed 15 classes of Credit Suisse
First Boston Mortgage Securities Corp., Commercial Mortgage Pass-
Through Certificates, Series 2002- CKN2 as:
-- Class A-2, $63,941,045, affirmed at Aaa
-- Class A-3, $572,398,000, affirmed at Aaa
-- Class A-X, Notional, affirmed at Aaa
-- Class A-SP, Notional, affirmed at Aaa
-- Class A-Y, Notional, affirmed at Aaa
-- Class B, $34,430,000, affirmed at Aaa
-- Class C-1, $15,000,000, affirmed at Aaa
-- Class C-2, $14,840,000, affirmed at Aaa
-- Class D, $9,181,000, affirmed at Aa2
-- Class E, $11,477,000, upgraded to A1 from A2
-- Class F, $13,772,000, affirmed at Baa1
-- Class G, $10,329,000, affirmed at Baa3
-- Class H, $11,477,000, affirmed at Ba1
-- Class J, $12,624,000, affirmed at Ba2
-- Class K, $4,591,000, affirmed at Ba3
-- Class L, $4,590,000, affirmed at B1
-- Class M, $9,182,000, downgraded to B3 from B2
-- Class N, $2,295,000, downgraded to Caa1 from B3
Moody's upgraded Class E due to overall improvement in pool
performance and increased credit enhancement and defeasance.
Moody's downgraded Classes M and N due to projected losses from
specially serviced loans.
As of the October 20, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 13%
to $803 million from $918 million at securitization. The
Certificates are collateralized by 193 loans, ranging in size from
less than 1.0% to 6.5% of the pool, with the top 10 loans
representing 32.5% of the pool. The pool includes eighty-five
loans, representing approximately 18.7% of the pool, which are
secured by residential cooperative properties and have underlying
ratings of Aaa. Twenty-eight loans, representing 24.4% of the
pool, have defeased and are collateralized by U.S. Government
securities.
Two loans have been liquidated from the pool resulting in an
aggregate realized loss of approximately $3.1 million. There are
three loans currently in special servicing, representing 1.6% of
the pool. Moody's is estimating an aggregate $5.8 million loss
from the specially serviced loans. Thirty-one loans, representing
24.1% of the pool, are on the master servicer's watchlist. The
watchlist includes loans which meet certain portfolio review
guidelines established as part of the Commercial Mortgage
Securities Association's monthly reporting package. As part of
Moody's ongoing monitoring of a transaction, Moody's reviews the
watchlist to assess which loans have material issues that could
impact performance.
Moody's was provided with year-end 2007 and partial-year 2008
operating results for approximately 94% and 58% of the conduit
pool, respectively. Moody's weighted average loan to value ratio
is 85% compared to 89% at Moody's prior full review in April 2007
and 90% at securitization.
The top three loans represent 15.4% of the pool. The largest loan
is the Paradise Island Apartments Loan ($51.8 million - 6.5%),
which is secured by a 980-unit multifamily complex located in
Jacksonville, Florida. The property was 90% occupied as of June
2008 compared to 84% at last review. Moody's LTV is 94% compared
to 99% at last review.
The second largest loan is the Beaver Valley Mall Loan
($44.8 million - 5.6%), which is secured by the borrower's
interest in a 1.2 million square foot regional mall (946,000
square feet of collateral) located approximately 35 miles
northwest of downtown Pittsburgh in Center Township, Pennsylvania.
The mall is anchored by Sears, J.C. Penney, Boscov's and Macy's.
The mall's performance has declined since securitization due to
higher expenses and competition from Pittsburg Mills, which opened
in 2005. The loan sponsor is Pennsylvania REIT. This loan had an
investment grade underlying rating at securitization but due to
the decline in property performance, it no longer has an
underlying rating. Moody's LTV is 85% compared to 77% at last
review.
The third largest conduit loan is the PNC Center Loan
($41.5 million - 5.2%), which is secured by a 498,000 square foot
office building located in downtown Cincinnati, Ohio. The largest
tenants are PNC (35% NRA; lease expiration February 2014) and
Frost Brown Todd (25%; lease expiration December 2011). The
property was 91% occupied as of March 2008 compared to 89% at last
review.
Moody's periodically completes full reviews in addition to
monitoring transactions on a monthly basis. Moody's prior full
review is summarized in a Press Release dated April 18, 2007.
Moody's has published rating methodologies outlining its
analytical approach to surveillance and its approach to rating
conduit and fusion transactions. In addition, Moody's has
published numerous articles outlining its ratings approach to the
various property types customarily deposited within these
transactions along with other articles on credit issues unique to
CMBS. The major rating methodologies employed in analyzing this
transaction include:
CMBS: Moody's Approach to Surveillance, September 30, 2002 -- this
paper provides an overview of Moody's surveillance philosophy, an
indication of what prompts a conduit review, how conduit and large
loan monitoring is performed, and what its objectives are with
respect to post-closing requests and servicer reviews;
CMBS: Moody's Approach to Rating U.S. Conduit Transactions,
September 15, 2000 -- this paper provides an overview of rating
methodology and process with details on property level analysis,
loan level analysis, legal and structural characteristics, and
portfolio characteristics with supplementary information on legal
issues, a research summary, helpful information for commercial
real estate transactions, capitalization rates, and guidelines for
capital reserves; and
US CMBS: Moody's Approach to Rating Fusion Transactions, April 19,
2005 -- this paper discusses the key ratings factors for fusion
deals, value drivers for office and retail properties, valuation
and cap rate issues, property type volatility, Moody's large loan
tranching methodology, and an assessment of subordination levels.
DELUXE ENT: S&P Trims Ratings to 'B-' on Likely Covenant Breach
---------------------------------------------------------------
Standard & Poor's Rating Services lowered its corporate credit and
issue-level ratings on Deluxe Entertainment Service Group Inc. by
one notch, based on the concern that a covenant violation could
occur in the fourth quarter. The corporate credit rating was
lowered to 'B-' from 'B', and the rating outlook is stable.
"The 'B-' rating reflects the risk of widespread adoption of
digital projection, Deluxe's dependence on a steady film release
schedule by several large movie studios, narrowing headroom under
progressively tightening financial covenants, and an aggressive
financial policy, evidenced by the company's debt-financed
dividend last year," said Standard & Poor's credit analyst Tulip
Lim. "Deluxe's leading market share in motion picture film
processing and duplication, good near-term growth prospects in its
creative services and European film laboratory businesses, its
long-term contracts with movie studios, and EBITDA to interest at
3x with positive discretionary cash flow only minimally offset
these factors."
Los Angeles, California-based Deluxe processes and prints 35mm
film for the motion picture industry and distributes release and
trailer prints for exhibition in theaters. The company also
provides post-production services for movie studios.
The transition to digital cinema projection presents Deluxe with a
major challenge. If movie exhibitors adopt digital projection on
a widespread basis, 35mm film processing volume will decline,
hurting the company's financial results. It appears that several
U.S. exhibitors are moving closer to installing digital
projectors. Carmike Cinemas Inc. completed a rollout of digital
projectors to 2,174 screens in 2007. Regal Entertainment Group,
AMC Entertainment Holdings Inc., and Cinemark Holdings Inc., which
together account for approximately 40% of U.S. screens, have
formed a joint venture, Digital Cinema Implementation Partners
LLC, to deploy digital projectors in their circuits.
A significant rollout of projectors by these three exhibitors
could begin as early as 2009, and could be substantially completed
by 2011. Deluxe's creative services division stands to benefit
from the digital cinema transition because it provides a wide
range of services for digital media. However, it is a much
smaller division than the others, and its growth will not offset
the decline in traditional film processing.
DENNY'S CORPORATION Sept. 24 Balance Sheet Upside-Down by $160Mln
-----------------------------------------------------------------
Denny's Corporation's consolidated balance sheet as of
Sept. 24, 2008, showed $357.68 million in total assets,
$517.36 million in total liabilities, resulting to $159.68 million
in shareholders' deficit.
At Sept. 24, 2008, the company's consolidated balance sheet also
showed strained liquidity with $54.17 million in total current
assets available to pay $112.435 million in total current
liabilities.
The company posted $10.56 million in net profit on $189.28 billion
in net revenues for the third quarter ended Sept. 24, 2008,
compared with $4.95 million in net profit on $241.4 billion in net
revenues for same period ended Sept. 27, 2007.
Full-text copy of Denny's Corporation's third quarter results is
available free of charge at: http://researcharchives.com/t/s?3460
About Denny's Corp.
Headquartered in Spartanburg, South Carolina, Denny's
Corporation (Nasdaq: DENN) -- http://www.dennys.com/-- is a
full-service family restaurant chain, consisting of 354 company-
owned units and 1,191 franchised and licensed units, with
operations in the United States, Canada, Costa Rica, Guam, Mexico,
New Zealand and Puerto Rico.
DLJ COMMERCIAL: Fitch Takes Rating Actions on Various Certificates
------------------------------------------------------------------
Fitch takes various actions and assigns Outlooks to DLJ Commercial
Mortgage Corp.'s pass-through certificates, series 1999-CG2, as:
Fitch downgraded and lowered the distressed recovery rating of
these classes as:
-- $15.5 million class B-7 to 'B'; Outlook Negative from 'B+';
-- $10.9 million class B-8 to 'CC'/DR4' from 'CCC/DR3'.
Fitch upgraded this class:
-- $38.8 million class B-3 to 'AA'; Outlook Stable from 'AA-'.
Fitch also affirmed these classes:
-- $718.8 million class A-1B at 'AAA'; Outlook Stable;
-- Interest-only class S at 'AAA'; Outlook Stable;
-- $69.8 million class A-2 at 'AAA'; Outlook Stable;
-- $81.4 million class A-3 at 'AAA'; Outlook Stable;
-- $19.4 million class A-4 at 'AAA'; Outlook Stable;
-- $58.1 million class B-1 at 'AAA'; Outlook Stable;
-- $23.3 million class B-2 at 'AAA'; Outlook Stable;
-- $31 million class B-4 at 'A-'; Outlook Stable;
-- $15.5 million class B-5 at 'BBB'; Outlook Stable;
-- $19.4 million class B-6 at 'BB+'; Outlook Negative.
Class A-1A has been paid in full. The balance of the non-rated
class C has been reduced to zero due to realized losses on
specially serviced assets.
The downgrades of classes B-7 and B-8 are a result of increased
loss expectations on specially serviced loans since Fitch' last
rating action. Rating Outlooks reflect the likely direction of
any rating changes over the next one to two years.
The upgrade of class B-3 is due to an additional 9.7% paydown and
4% defeasance since Fitch's last rating action. As of the October
2008 distribution date, the pool's aggregate certificate balance
has been reduced 29% to $1.10 billion from $1.55 billion at
issuance. Ninety-six loans (42.3%) have defeased since issuance.
There is 44% non-defeased loans scheduled to mature in 2009. The
loans have a weighted average coupon of 7.75% and a weighted
average debt service coverage ratio of 1.58 times.
There is currently one loan (1%) in special servicing. The loan
is secured by a multifamily property located in Houston, Texas and
is currently 60 days delinquent. The loan transferred to special
servicing Sept. 19, 2008 due to imminent default. The property
has been underperforming for several years and the borrower's
cannot continue to fund the cashflow shortages following the
interest rate adjustment date. The special servicer will follow a
dual track of workout and foreclosure.
DOUGLAS JOHNSON: Wants Schedules Filing Extended to December 1
--------------------------------------------------------------
Pursuant to Rule 1007(c) of the Federal Rules of Bankruptcy
Procedure, Douglas R. Johnson was required to file with his
bankruptcy petition, or by October 28, 2008 -- 15 days thereafter
-- schedules of assets and liabilities, a schedule of executory
contracts and unexpired leases and a statement of financial
affairs. The deadline may be extended for cause.
By this motion, Mr. Johnson asks the U.S. Bankruptcy Court for the
Southern District of Texas to extend the deadline to December 1,
2008.
Mr. Johnson owns 100% of Johnson Broadcasting, Inc. and roughly
85% of Johnson Broadcasting of Dallas, Inc. He is the sole
director of JB and JBDallas. JB owns and operates KNWS-TV, a
commercial UHF television station licensed to Katy, Texas, within
the Houston, Texas designated market area. KNWS-TV is an
independent station. JBDallas owns and operates KLDT-DT, a
commercial television station licensed to Lake Dallas, Texas,
within the Dallas-Fort Worth, Texas DMA. KLDT-DT is an independent
station.
Mr. Johnson also owns three large homes but does not currently
occupy the homes. The largest of the homes is in Houston, Texas
and, at the time of bankruptcy, was being occupied by his ex-wife,
pursuant to a final Decree of Divorce. The remaining homes are
located in Michigan.
Craig H. Cavalier, Esq., in Houston, Texas, explains that Mr.
Johnson is dependent upon the compilation of information from JB
and JBDallas for the preparation of his own Schedules and
Statement. Mr. Cavalier also notes that Mr. Johnson has to make
arrangements to enter the property and take inventory of all
personal property. Additionally, Mr. Johnson has personal
property located out of state, making it not readily accessible
for the purposes of taking inventory.
Mr. Johnson believes the requested extension will provide
sufficient time to prepare and to file all necessary Schedules and
Statement.
Douglas R. Johnson in Houston, Texas, filed a voluntary chapter 11
petition on October 13, 2008, with the U.S. Bankruptcy Court for
the Southern District of Texas (Case No. 08-36584). The Debtor
continues to manage and operate his affairs as a debtor-in-
possession. No creditors' committee has yet been appointed in the
case by the United States Trustee. When Mr. Johnson filed for
bankruptcy, he estimated assets between $10 million and
$50 million, and debts between $10 million and $50 million.
Johnson Broadcasting (Case No. 08-36583) and Johnson Broadcasting
of Dallas (Case No. 08-36585) are debtors in separate chapter 11
petitions also filed on October 13, 2008, with the U.S. Bankruptcy
Court for the Southern District of Texas.
Johnson Broadcasting and Johnson Broadcasting of Dallas are
represented by John James Sparacino, Esq., and Timothy Alvin
Davidson, II, Esq., at Andrews and Kurth in Houston, as bankruptcy
attorneys. The Debtors estimated assets between $10 million and
$50 million, and debts between $10 million and $50 million.
EDUCATION RESOURCES: Excl. Period Extension Hearing on Nov. 18
--------------------------------------------------------------
The deadline pursuant to which The Education Resources Institute
Inc. has exclusive right to file a plan of reorganization under
Chapter 11 expires on Nov. 3, 2008, and the deadline pursuant to
which the Debtor has exclusive right to solicit acceptances of a
plan expires on Jan. 5, 2009.
The Debtor previously requested further extension of the exclusive
periods until Feb. 2, 2009, for the plan filing deadline and April
3, 2009, for the solicitation period.
After due deliberations and negotiations between the Debtor and
the Official Committee of Unsecured Creditors, they agree to
resolve issues concerning the extension of the exclusive periods.
As stipulated, the parties agreed that, pursuant to Section
1121(d)(2)(A) of the Bankruptcy Code, the time in which only the
Debtor or the Creditors' Committee may file a Chapter 11 plan will
be extended until Nov. 18, 2008; provided that prior to the
submission of a plan by the Debtor or the Committee, the other
party must acknowledge its assent to the filing of the plan.
Notwithstanding the extension of the Exclusive Period, the U.S.
Bankruptcy Court for the District of Massachusetts will convene a
hearing to consider approval of the Debtor's second exclusive
periods' extension request on Nov. 18, 2008, at 10:00 a.m. The
Committee has until November 17 to file an objection to the
extension request.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston
Systems Resources Inc., Brockton Education Opportunity Center,
TERI, TERI College Access, TERI College Access Centers and TERI
Marketing Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than
$17 billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq., at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC. Grant Thornton LLP, acts as financial advisors,
and Citigroup Global Markets Inc. acts as investment banker. Its
Claims Agent is Epiq Bankruptcy Solutions LLC. When the Debtor
filed for protection from its creditors, it listed estimated
assets of more that $1 billion and estimated debts of $500,000 to
$1 billion.
(TERI Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ELECTRICAL COMPONENTS: Moody's Confirms 'Caa2' C and PD Ratings
---------------------------------------------------------------
Moody's Investors Service confirmed the Caa2 corporate family and
probability of default ratings of Electrical Components
International. Moody's also upgraded the rating of its first lien
senior secured credit facility to Caa1 from Caa2 while maintaining
the Caa3 rating on the second lien senior secured term loan, which
reflects improvements in the company's capital structure. The
outlook is stable.
The confirmation concludes a review for possible downgrade that
was extended on August 4, 2008, as a result of the delay in
reaching an agreement to amend the financial covenants contained
in ECI's credit agreements. Subsequently, ECI amended its credit
agreement and is no longer in default. As a result, ECI's
auditors, Ernst & Young LLP, issued an unqualified opinion for the
company's 2007 year-end financial, bringing all financial
reporting requirements current.
The Caa2 corporate family rating reflects the negative trend in
credit metrics resulting from the continued downturn in the U.S.
housing market, the significant slowdown in the Western European
residential construction market and the resulting decline in the
company's key end market -- home appliances. Moody's believes
that the U.S. and Western European economies will continue to slow
through the balance of 2008 and through 2009 negatively impacting
their respective housing markets and stressing ECI's operating
margins. Furthermore, the current turmoil in the credit markets
has added economic uncertainty potentially limiting available
credit for home appliance purchases. To meet these challenges ECI
is undertaking a restructuring program to improve its operating
efficiencies including consolidation of production facilities.
The stable outlook reflects that ECI is no longer in covenant
violation under its credit agreement restoring access to its
revolving credit facility. ECI's adequate liquidity profile and
benefits from its restructuring program should assist the company
during the current difficult operating market.
The Caa1 rating of the senior secured bank credit facility and the
Caa3 rating of the second lien term loan are consistent with the
application of Moody's Loss Given Default Methodology and reflect
the cure of the technical default in the credit facilities, and a
$15 million reduction in the first lien term loan from
$244 million to $229 million that was funded by capital
contribution from the equity sponsor.
These ratings/assessments were affected by this action:
-- Corporate family rating confirmed at Caa2;
-- Probability of default confirmed at Caa2;
-- $264 million senior secured bank credit facility upgraded to
Caa1 (LGD3, 38%) from Caa2 (LGD3, 36%); and,
-- $60 million second lien term loan due 2014 confirmed at Caa3,
buts its loss given default assessment is changed to
(LGD5, 80%) from (LGD5, 79%).
The last rating action was on August 4, 2008 at which time Moody's
downgraded ECI's corporate family rating to Caa2 from Caa1.
Electrical Components International, Inc., headquartered in St.
Louis, Missouri, designs, manufactures and markets wire harnesses
and provides assembly services primarily for major white goods
appliance manufacturers in North America and Europe.
EMISPHERE TECH: Has Until November 20 to Comply with NASDAQ Rule
----------------------------------------------------------------
Emisphere Technologies Inc. disclosed in a Securities and Exchange
Commission filing that on Oct. 21, 2008, it received a letter from
The NASDAQ Stock Market advising that, for the last 10 consecutive
trading days, the market value of the company's listed securities
had been below the minimum $35,000,000 requirement for continued
inclusion on The NASDAQ Capital Market pursuant to NASDAQ
Marketplace Rule 4310(c)(3)(B).
In the NASDAQ Letter, NASDAQ advised that, in accordance with
NASDAQ Marketplace Rule 4310(c)(8)(C), the company will be
provided thirty calendar days, or until Nov. 20, 2008, to regain
compliance with NASDAQ Marketplace Rule 4310(c)(3)(B).
The NASDAQ Staff may determine that the company has regained
compliance with NASDAQ Marketplace Rule 4310(c)(3)(B) if, at any
time before the end of the Compliance Period, the market value of
the company's listed securities is $35,000,000 or more for a
minimum of ten consecutive business days.
If the xompany does not regain compliance within the Compliance
Period, NASDAQ will provide the company with written notification
that the Company's common stock will be delisted from the NASDAQ
Capital Market. At that time, the Company may appeal the
determination by the NASDAQ Staff to delist its common stock to a
Listing Qualifications Panel.
The company is currently considering actions that may allow it to
regain compliance with the NASDAQ continued listing standards and
maintain its NASDAQ listing. If the company is unsuccessful in
maintaining its NASDAQ listing, then the company may pursue
listing and trading of the company's common stock on another
securities exchange or association with different listing
standards than NASDAQ.
About Emisphere Technologies
Based in Cedar Knolls, New Jersey, Emisphere Technologies Inc.,
(NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules using its eligen(R) technology.
These molecules and compounds could be currently available or are
under development. The molecules are usually delivered by
injection; in many cases, their benefits are limited due to poor
bioavailability, slow on-set of action or variable absorption. The
eligen(R) technology can be applied to the oral route of
administration as well other delivery pathways, like buccal,
rectal, inhalation, intra-vaginal or transdermal.
* * *
PricewaterhouseCoopers LLP expressed substantial doubt about
Emisphere Technologies Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
reported that the company has experienced sustained operating
losses, has limited capital resources, and has significant future
commitments.
The company has limited capital resources and operations to date
have been funded primarily with the proceeds from collaborative
research agreements, public and private equity and debt financings
and income earned on investments.
Emisphere Technologies Inc.'s consolidated balance sheet at
June 30, 2008, showed $20.2 million in total assets and
$44.8 million in total liabilities, resulting in a $24.6 million
in total stockholders' deficit.
The company reported $7.6 million in net losses on $14,000 in
revenues for the second quarter ended June 30, 2008, compared with
$12.1 million in net losses on $398,000 in revenues for the same
period in 2007.
The company posted $11.6 million in net losses on $169,000 in
revenues for the first half ended June 30, 2008, compared with
$16 million in net losses on $3.2 million in revenues for the same
period in 2007.
ESTATE FINANCIAL: U.S. Trustee Appoints 7-Member Creditors Panel
----------------------------------------------------------------
Peter C. Anderson, the U.S. Trustee for Region 16, appointed seven
creditors to serve on the Official Committee of Unsecured
Creditors in Estate Financial Inc.'s Chapter 11 case.
The Creditors Committee members are:
a) Jim W. Davis
P.O. Box 15
Lemoore, CA 93245
Tel: (559) 707-0084
b) Thomas Schultheis
4455 Via Bendita
Santa Barbara, CA 93110
Tel: (805) 964-1224
c) Clifford Andreas Munk
Trustee of the Clifford Andreas Munk
and Lois Munk Revocable Trust
c/o Clifford Munk
P.O. Box 433
Paso Robles, CA 93447
Tel: (805) 238-1544
d) Donna and Robert Berg Foundation
c/o Robert Berg
5161 Vineyard Drive
Paso Robles, CA 93446
Tel: (805) 238-5825
(805) 238-2401
e) Nancy Trotter
Trustee of the Nancy Lee Missakian Trotter Trust
c/o Nancy Lee Missakian Trotter
3901 Laguna Blanca Drive
Santa Barbara, CA 93110
Tel: (805) 687-0130
f) John G. Henry, M.D.--Pension Fund
c/o John G. Henry, M.D.
1905 Hidden Valley Road
Templeton, CA 93465
Tel: (805) 434-1873
(805) 434-1720
Fax: (805) 434-2068
g) Marjorie Jacobsen
Trustee of the Marjorie LaVerne Jacobsen 2002
Revocable Trust
c/o Marjorie L. Jacobsen
261 Leighton Avenue
Cambria, CA 93428
Tel: (805) 927-0665
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Estate Financial
Five creditors of Paso Robles, California-based Estate Financial
Inc. -- http://www.estatefinancial.com/-- filed an involuntary
Chapter 11 petition against the real estate broker on June 25,
2008 (Bankr. C.D. Calif. Case Number 08-11457). Petitioner Steve
Gardality asserted a claim of $6,269,768. Estate Financial Inc.
consented to the bankruptcy filing on July 16, 2008. Robert B.
Orgel, Esq., at Pachulski Stang Ziehl & Jones LLP, and William C.
Beall, Esq., at Beall and Burkhardt, represent the Debtor as
counsel. A Chapter 11 trustee, Thomas P. Jeremiassen, was
appointed by the Court on July 23, 2008.
Paso Robles, California-based Estate Financial Mortgage Fund, LLC,
filed for Chapter 11 protection on July 1, 2008 (Bankr. C.D. Ca.
Case No. 08-11535). Lewis R. Landau, Esq., of Calabasas,
California, represents the Debtor as counsel. In its schedules,
Estate Financiual Mortgage Fund, LLC listed assets of $19,620,404
and debts of $34,167. Bradley D. Sharp was appointed as Chapter
11 trustee for the
case.
ESTATE FINANCIAL: Files Schedules of Assets and Liabilities
-----------------------------------------------------------
Estate Financial Inc. filed with the U.S. Bankruptcy Court for the
Central District of California, its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property
B. Personal Property $27,428,550
C. Property Claimed as
Exempt
D. Creditors Holding $5,764,807
Secured Claims
E. Creditors Holding 27,556
Unsecured Priority
Claims
F. Creditors Holding
1,524,392
Unsecured Non-priority
Claims
----------- -----------
TOTAL $27,428,550 $7,316,755
About Estate Financial
Five creditors of Paso Robles, California-based Estate Financial
Inc. -- http://www.estatefinancial.com/-- filed an involuntary
Chapter 11 petition against the real estate broker on June 25,
2008 (Bankr. C.D. Calif. Case Number 08-11457). Petitioner Steve
Gardality asserted a claim of $6,269,768. Estate Financial Inc.
consented to the bankruptcy filing on July 16, 2008. Robert B.
Orgel, Esq., at Pachulski Stang Ziehl & Jones LLP, and William C.
Beall, Esq., at Beall and Burkhardt, represent the Debtor as
counsel. A Chapter 11 trustee, Thomas P. Jeremiassen, was
appointed by the Court on July 23, 2008.
Paso Robles, California-based Estate Financial Mortgage Fund, LLC,
filed for Chapter 11 protection on July 1, 2008 (Bankr. C.D. Ca.
Case No. 08-11535). Lewis R. Landau, Esq., of Calabasas,
California, represents the Debtor as counsel. In its schedules,
Estate Financial Mortgage Fund, LLC listed assets of $19,620,404
and debts of $34,167. Bradley D. Sharp was appointed as Chapter
11 trustee for the
case.
ESTATE MORTGAGE: Files Schedules of Assets and Liabilities
----------------------------------------------------------
Estate Financial Mortgage Fund, LLC filed with the U.S. Bankruptcy
Court for the Central District of California, its schedules of
assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property
B. Personal Property $19,620,404
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims
E. Creditors Holding
Unsecured Priority
Claims
F. Creditors Holding
$34,167
Unsecured Non-priority
Claims
----------- -----------
TOTAL $19,620,404 $34,167
About Estate Financial
Five creditors of Paso Robles, California-based Estate Financial
Inc. -- http://www.estatefinancial.com/-- filed an involuntary
Chapter 11 petition against the real estate broker on June 25,
2008 (Bankr. C.D. Calif. Case Number 08-11457). Petitioner Steve
Gardality asserted a claim of $6,269,768. Estate Financial Inc.
consented to the bankruptcy filing on July 16, 2008. Robert B.
Orgel, Esq., at Pachulski Stang Ziehl & Jones LLP, and William C.
Beall, Esq., at Beall and Burkhardt, represent the Debtor as
counsel. A Chapter 11 trustee, Thomas P. Jeremiassen, was
appointed by the Court on July 23, 2008.
Paso Robles, California-based Estate Financial Mortgage Fund, LLC,
filed for Chapter 11 protection on July 1, 2008 (Bankr. C.D. Ca.
Case No. 08-11535). Lewis R. Landau, Esq., of Calabasas,
California, represents the Debtor as counsel. In its schedules,
Estate Financial Mortgage Fund, LLC listed assets of $19,620,404
and debts of $34,167. Bradley D. Sharp was appointed as Chapter
11 trustee for the case.
FANNIE MAE: Will Write Off Almost $20.6BB in Tax Credits
--------------------------------------------------------
James R. Hagerty at The Wall Street Journal reports that Fannie
Mae said on Wednesday that it will write off almost all of the
$20.6 billion in tax credits on its books.
According to WSJ, the write-off will result in a big charge
against Fannie Mae's profits.
WSJ relates that some mortgage lenders believe that Fannie Mae and
Freddie Mac haven't done much to boost the supply of mortgage
credit since the Federal Housing Finance Agency, which regulates
the government-backed providers of funding for home mortgages,
took over the firms.
Fannie Mae and Freddie Mac, according to WSJ, said that they are
reconsidering the terms they offer in purchasing or guaranteeing
loans. According to WSJ, Freddie Mac's CEO David Moffett said
that the company is looking at "what is the requisite pricing for
the risk we're taking."
WSJ states that Fannie Mae's CEO Herbert Allison said that the
company is trying to figure out the minimum return on the capital
it needs "to operate in a safe and sound manner," and that once
the firm has worked out that minimum, Fannie Mae will adjust its
terms for purchasing or guaranteeing mortgages.
Investors, WSJ says, remain uncertain to what degree the
government will stand behind Fannie Mae's and Freddie Mac's debt
in the long term, but the Treasury agreed to provide each of the
firms with $100 billion in capital, if needed, to cover losses on
surging mortgage defaults.
Treasury & IRS Issue Revenue Procedure 2008-64
The U.S. Treasury Department and the Internal Revenue Service
issued on Wednesday the Revenue Procedure 2008-64, which provides
that certain gains and losses from indirect ownership of Fannie
Mae and Freddie Mac preferred stock can be treated as ordinary
income and loss.
The Emergency Economic Stabilization Act of 2008 (EESA) provided
banks and certain financial institutions ordinary treatment for
gains and losses on direct investments in preferred stock of
Fannie Mae and Freddie Mac. It also directed the Treasury
Department to issue guidance with respect to the treatment of
these gains or losses when realized indirectly through certain
investment vehicles.
Rev. Proc. 2008-64 provides banks and certain other financial
institutions the benefit of ordinary treatment on gains and losses
that they are experiencing on certain indirect investments in this
preferred stock.
Many financial institutions have invested in Fannie Mae and
Freddie Mac preferred stock indirectly through certain adjustable
rate preferred programs and other vehicles.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
FITNESS HOLDINGS: Gets Interim Permission to Use PWB Collateral
---------------------------------------------------------------
Fitness Holdings International, Inc., sought and obtained, on an
interim basis, authority from the U.S. Bankruptcy Court for the
Central District of California to use cash collateral securing its
obligations to Pacific Western Bank.
The Debtor will use the money to maintain its operations without
disruption, pay ordinary operating expenses, and replenish its
inventory.
As of its bankruptcy filing, the Debtor owed Pacific Western
$18,700,000 under a June 2007 revolving credit facility and a term
loan credit facility. The loan is secured by personal property of
the Debtor.
The Debtor also owed its 100% equity holder, Hancock Park Capital
II, L.P., $27,500,000 in subordinated unsecured debt as of the
petition date. It also owed $9,000,000 to trade vendors,
suppliers, landlords, customers and other service providers.
Before the petition date, Pacific Western seized roughly
$2,000,000 from the Debtor's bank accounts. In February, it
demanded and obtained a guarantee of the Debtor's obligations
under the loan from the Debtor's equity holder, Hancock Park
Capital II, L.P. The bank made demand for payment in full under
the loan and the guarantee based on nonmonetary defaults under the
loan.
The Debtor will utilize the cash collateral in accordance to a
budget prepared by its financial analyst, Brandon Sugimoto, and
outside financial consultant Richard Alston of Kibel Green, Inc.
The budget was reviewed by its CEO Kenton Van Harten. The budget
forecasts:
$26,800,000 in cash collections over the next 15 weeks; and
$23,800,000 in cash disbursements for operating expenses and
administrative costs associated with the bankruptcy
for the 15-week period.
During the budget period, the Debtor also seeks to repay
$2,400,000 from free cash flows to keep the bank collateral
shortfall from increasing.
The Debtor is seeking to close least desirable stores.
The Debtor has not entered into any agreement with Pacific Western
for the use of the cash collateral. The Debtor found it
impractical to commence negotiations pre-bankruptcy. The Debtor,
however, intends to commence talks and is hopeful that a cash
collateral stipulation could be reached with the bank.
The Debtor proposes to provide the bank with adequate protection
by granting it a lien on cash, inventory, fixtures, furniture and
equipment and accounts receivable acquired postpetition. The
Debtor tells the Court that the bank's interest in the cash
collateral will be adequately protected because there will be no
diminution in cash collateral under the budget. Moreover, the
Debtor notes that the use of cash collateral will preserve the
going concern value of the collateral.
The Court will convene a Final Hearing on the Debtor's request on
November 5, 2008, at 2:00 p.m. Objections, if any, must be filed
by November 3.
Long Beach, California-based Fitness Holdings International, Inc.,
doing business as Busy Body Home Fitness, OMNI Fitness Equipment
and LA Gym Equipment, sells fitness equipment for home use. The
company operates 111 stores selling premiere brands positioned in
the middle to high end of the fitness market. The company filed
for bankruptcy citing general weaknessin the economy and the
decline in the performance of the retail sector. Its lender
Pacific Western Bank also seized roughly $2,000,000 of the
company's funds from its bank accounts, alleging nonmonetary
defaults under the loan covenants.
Fitness Holdings filed for bankruptcy October 20, 2008, before the
U.S. Bankruptcy Court for the Central District Of California in
Los Angeles (Case No. 08-27527). Judge Barry Russell presides
over the case. David S Kupetz, Esq., at Sulmeyer Kupetz, in Los
Angeles, serves as the Debtor's bankruptcy attorneys. When it
filed for bankruptcy, the Debtor estimated assets between $10
million and $50 million, and debts between $10 million and $50
million.
FITNESS HOLDINGS: To Shutter 19 Outlets, Eyes Going Concern Sale
----------------------------------------------------------------
Fitness Holdings International, Inc., has identified 19
underperforming retail outlets that it seeks to immediately close,
subject to conducting store closing sale or transferring inventory
to other outlets.
Fitness Holdings has asked the U.S. Bankruptcy Court for the
Central District of California to approve store closures, conduct
store closing sales, and discontinue operations at the affected
stories. The Debtor has also sought permission to reject leases
for the affected stores, effective on the earlier of November 30,
2008, or the date the Debtor relinquishes possession of a
particular property to the landlord.
The Debtor said the move is designed to maximize the estate's
recovery.
The Debtor currently operates 111 retail stores. The Debtor also
has leases for two locations that are closed, sublets one location
to a third party, has one office location in Long Beach, and has
eight warehouse locations.
CEO Kenton Van Harten said in papers filed in court that
significant group of the Debtor's stories in the northeastern
United States or a significant group of the Debtor's stories in
the western United States could be sold as a going concern. This
approach, he said, would maximize estate value in a manner
significantly greater than simply a straight liquidation of all
stores. It would also maximize the opportunity to preserve jobs
and a significant customer for the Debtor's suppliers.
Long Beach, California-based Fitness Holdings International, Inc.,
doing business as Busy Body Home Fitness, OMNI Fitness Equipment
and LA Gym Equipment, sells fitness equipment for home use. The
company operates 111 stores selling premiere brands positioned in
the middle to high end of the fitness market. The company filed
for bankruptcy citing general weaknessin the economy and the
decline in the performance of the retail sector. Its lender
Pacific Western Bank also seized roughly $2,000,000 of the
company's funds from its bank accounts, alleging nonmonetary
defaults under the loan covenants.
Fitness Holdings filed for bankruptcy October 20, 2008, before the
U.S. Bankruptcy Court for the Central District Of California in
Los Angeles (Case No. 08-27527). Judge Barry Russell presides
over the case. David S Kupetz, Esq., at Sulmeyer Kupetz, in Los
Angeles, serves as the Debtor's bankruptcy attorneys. When it
filed for bankruptcy, the Debtor estimated assets between $10
million and $50 million, and debts between $10 million and $50
million.
FORD MOTOR: K. Kerkorian Had 4.98% Equity Stake as of July 29
-------------------------------------------------------------
Tracinda Corporation and Kirk Kerkorian disclosed in a Schedule
13D filing with the U.S. Securities and Exchange Commission that
they may be deemed to beneficially own 107,087,549 shares of Ford
Motor Co. common stock or 4.98% of the outstanding shares.
Percentage calculated on the basis of 2,190,498,174 shares of
common stock issued and outstanding as of July 29, 2008.
About Ford Motor Co.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch Ratings downgraded the Issuer Default Rating of Ford Motor
Company and Ford Motor Credit Company by one notch to 'CCC' from
'B-'.
FREDDIE MAC: Reconsidering Terms Offered in Buying & Backing Loans
------------------------------------------------------------------
James R. Hagerty at The Wall Street Journal reports that Freddie
Mac and Fanne Mae said that they are reconsidering the terms they
offer in purchasing or guaranteeing loans.
Freddie Mac's CEO David Moffett said that the company is looking
at "what is the requisite pricing for the risk we're taking," WSJ
says.
WSJ relates that some mortgage lenders believe that Fannie Mae and
Freddie Mac haven't done much to boost the supply of mortgage
credit since the Federal Housing Finance Agency, which regulates
the government-backed providers of funding for home mortgages,
took over the firms.
WSJ states that Fannie Mae's CEO Herbert Allison said that the
company is trying to figure out the minimum return on the capital
it needs "to operate in a safe and sound manner" and that once the
firm has worked out that minimum, Fannie Mae will adjust its terms
for purchasing or guaranteeing mortgages.
Investors, WSJ says, remain uncertain to what degree the
government will stand behind Fannie Mae's and Freddie Mac's debt
in the long term, but the Treasury agreed to provide each of the
firms with $100 billion in capital, if needed, to cover losses on
surging mortgage defaults.
Treasury & IRS Issue Revenue Procedure 2008-64
The U.S. Treasury Department and the Internal Revenue Service
issued on Wednesday the Revenue Procedure 2008-64, which provides
that certain gains and losses from indirect ownership of Fannie
Mae and Freddie Mac preferred stock can be treated as ordinary
income and loss.
The Emergency Economic Stabilization Act of 2008 (EESA) provided
banks and certain financial institutions ordinary treatment for
gains and losses on direct investments in preferred stock of
Fannie Mae and Freddie Mac. It also directed the Treasury
Department to issue guidance with respect to the treatment of
these gains or losses when realized indirectly through certain
investment vehicles.
Rev. Proc. 2008-64 provides banks and certain other financial
institutions the benefit of ordinary treatment on gains and losses
that they are experiencing on certain indirect investments in this
preferred stock.
Many financial institutions have invested in Fannie Mae and
Freddie Mac preferred stock indirectly through certain adjustable
rate preferred programs and other vehicles.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
GENERAL GROWTH: Constrained Liquidity Cues Moody's Ratings Cut
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings on General
Growth Properties, Inc., certain of its subsidiaries and The Rouse
Company LP (to B3 from Ba3 senior secured bank debt; to B3 from
Ba3 senior unsecured debt). The ratings remain on review for
further possible downgrade. The rating action reflects General
Growth's continued strained financial flexibility, and substantial
uncertainty of the REIT's liquidity position and credit profile
given significant near term refinancing and development funding
needs, coupled with expected earnings pressure due to a likely
protracted downturn in the economy.
Recently announced management changes are also worrisome as
Moody's believes this adds increasing uncertainty to the strategic
vision for the REIT. The earnings pressures have eroded General
Growth's credit metrics and the cushion for both the secured debt
and interest coverage covenants for the Rouse debt. Furthermore,
given the current capital constrained environment, Moody's
believes that the company's ability to pay off or refinance its
upcoming mortgage debt of $1.1 billion due at the end of next
month is very constrained.
The company has been exploring several alternatives to meet their
urgent capital needs, which includes working on extending the
maturity date of their mortgage loans due in November and also
marketing for sale their premier Las Vegas malls. Moody's notes
that the shedding of a portfolio which includes some of General
Growth's most profitable assets will likely compromise future
earnings power, portfolio quality, and credit metrics.
Moody's review will continue to focus on the REIT's ability to
manage through its substantial funding needs in the near term, as
well as its ultimate capital structure, asset composition, and
earnings strength and stability. The B3 rating reflects the
company's current credit metrics and its existing portfolio. A
further downgrade would likely reflect any refinancing missteps,
any weakening of current credit metrics and an acute reversal in
earnings strength or stability, or a breach in bond covenants.
A return to a stable outlook would be contingent upon the REIT's
ability to successfully refinance or extend on a long term basis
its near term debt maturities, maintain good operating performance
at its retail centers, preserve current credit metrics on a
consolidated basis, and comply with bond covenants.
These ratings were downgraded and placed under review down for
possible downgrade:
* GGP Limited Partnership - Senior secured bank debt to B3 from
Ba3, and senior unsecured debt shelf to (P)B3 from (P)Ba3.
* General Growth Properties, Inc. - Senior secured bank debt to
B3 from Ba3, and preferred stock shelf to (P)Caa2 from (P)B2.
* The Rouse Company LP - Senior unsecured debt to B3 from Ba3.
General Growth Properties, Inc. [NYSE: GGP] is headquartered in
Chicago, Illinois, and is one of the largest owners and operators
of regional malls in the United States. The REIT reported assets
of $29.5 billion, and equity of $1.9 billion, at June 30, 2008.
GENERAL MOTORS: Some Merger Issues Solved; Financing Woe Remains
----------------------------------------------------------------
Some problems in the General Motors Corp.-Chrysler LLC merger have
been resolved, except for issues including the financing of the
deal, Tom Krisher at The Associated Press reports, citing two
people familiar with the talks.
The AP relates that financing for the merger is complex and will
likely involve the federal government. The report says that GM is
asking the Bush administration and some members of Congress for
$10 billion to $15 billion in aid to help keep the company going
and to possibly make the Chrysler deal work.
John D. Stoll and Jeff Bennett at The Wall Street Journal report
that a group of six governors -- Michigan, Delaware, Kentucky, New
York, Ohio and South Dakota -- sent a letter to Treasury Secretary
Henry Paulson and Federal Reserve Chairperson Ben Bernanke on
Wednesday, asking government officials to work under the
provisions of the Emergency Economic Stabilization Act to aid the
auto industry.
According to WSJ, Michigan Gov. Jennifer Granholm, is willing to
support a request for federal assistance for the GM-Chrysler
merger, if the companies ask for it. The report says that Gov.
Granholm said, "We are in touch with GM and Chrysler all the time
and we want to be partners in these discussions we are having."
The AP quoted a source as saying, "There are issues besides
financing."
According to The AP, the sources said that GM would keep its
management should the company push through the merger, because the
firm would run the combined company.
Citing industry analysts, The AP states that at GM's cash burn
rate, it could reach the minimum cash levels required to operate
the company of $11 billion to $14 billion in 2009. According to
the report, GM has launched a program to save
$10 billion with internal cuts and raise some $5 billion through
asset sales and borrowing, although tight credit is likely getting
in the way of thos efforts.
GM is also postponing the launching of several models and engines,
The AP says, citing a person familiar with GM's product plans.
According to trade publication Automotive News, the delays are
aimed at saving money.
The AP reports that GM also extended its Nov. 1 deadline for
white-collar workers to accept buyout and early retirement
packages. GM's spokesperson Tom Wilkinson said that the company
is hoping that more employees will take the offers and lessen the
number of involuntary cuts, according to The AP.
The Kyodo news agency in Japan relates that GM is asking Toyota
for help turning itself around.
A merger between Chrysler and GM could force Ford Motor Co. to
also look for a partner for an alliance or a merger, WSJ reports.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of US$191.6 billion, and
total stockholders' deficit of US$56.9 billion. For the quarter
ended June 30, 2008, the company reported a net loss of US$15.4
billion over net sales and revenue of US$38.1 billion, compared to
a net income of US$891.0 million over net sales and revenue of
US$46.6 billion for the same period last year.
GENERAL MOTORS: Merger Could Mean Major Plant Closures & Layoffs
----------------------------------------------------------------
Neal E. Boudette and John D. Stoll at The Wall Street Journal
report that Grant Thornton LLP auto-industry consultant, Kimberly
Rodriguez, said that much of Chrysler LLC would disappear in a
merger with General Motors Corp. Chrysler could close seven of
its 14 asembly plants and eliminate 19 of its 26 car and truck
lines due to the merger, WSJ says, citing a study released
Thursday by Grant Thornton. The study indicates that about 30,000
to 40,000 of Chrysler's 66,000 workers would be laid off, and an
additional 50,000 jobs at suppliers and other companies would be
affected.
According to WSJ, Ms. Rodriguez warned that the impact on jobs and
the economy would be worse without a deal. A merger would be "in
the interest of the shareholders, the workers, the U.S.
government, all the stakeholders. The alternative would be
bankruptcy for Chrysler," the report says, citing Patrick Anderson
-- a consultant and founder of Anderson Economic Group.
Cerberus Capital Management LP and General Motors Corp. are in
talks of a possible merger between the two automakers. According
to published reports, in that deal, GM would take over Chrysler,
which is majority-owned by Cerberus, and Cerberus would have a
much larger stake in GM's GMAC LLC. Cerberus currently owns 51%
of GMAC.
Mr. Stoll and Jeff Bennett at The Wall Street Journal report that
a group of six governors -- Michigan, Delaware, Kentucky, New
York, Ohio and South Dakota -- sent a letter to Treasury Secretary
Henry Paulson and Federal Reserve Chairperson Ben Bernanke on
Wednesday, asking government officials to work under the
provisions of the Emergency Economic Stabilization Act to aid the
auto industry.
According to WSJ, Michigan Gov. Jennifer Granholm, is willing to
support a request for federal assistance for the GM-Chrysler
merger, if the companies ask for it. The report says that Gov.
Granholm said, "We are in touch with GM and Chrysler all the time
and we want to be partners in these discussions we are having."
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of US$191.6 billion, and
total stockholders' deficit of US$56.9 billion. For the quarter
ended June 30, 2008, the company reported a net loss of US$15.4
billion over net sales and revenue of US$38.1 billion, compared to
a net income of US$891.0 million over net sales and revenue of
US$46.6 billion for the same period last year.
GENERAL MOTORS: S&P Keeps 'B-' Credit Ratings Under Negative Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on General
Motors Corp. and on GM's 49%-owned finance affiliate GMAC LLC,
including the 'B-' credit ratings on both, remain on CreditWatch,
where they were placed with negative implications on Oct. 9, 2008.
"Since the CreditWatch placement, GM's situation has become
increasingly complex and extremely fluid in light of the weakening
global economic outlook and the state of the capital markets,"
said Standard & Poor's credit analyst Robert Schulz. Also,
published reports continue to discuss the potential for a merger
or partnership between GM and privately held Chrysler LLC
(CCC+/Negative/--). There have also been reports about the
potential for U.S. government-related financing or investment to
support some form of a Chrysler/GM combination.
It is important to note that S&P does not view the potential for
any eventual transaction involving GM and Chrysler-or any other
automaker-even in combination with government support, as a
panacea for these companies' credit concerns. New access to
funding could slow the erosion of these companies' liquidity.
However, rapid and massive changes would likely be integral to a
business combination, raising the possibility of a financial
restructuring or strategic bankruptcy filing by one or more of the
parties to facilitate such changes. (Managements of both GM and
Chrysler insist they will not pursue such strategies.)
In any event, S&P's most fundamental and serious concerns
regarding GM and Chrysler remain unchanged: the pressures on
liquidity facing both automakers and their auto finance affiliates
during the rest of this year and 2009, caused by the rapidly
weakening state of most global automotive markets and continued
turmoil in the credit markets.
Given the many possible permutations of corporate combinations and
government support and the uncertain timing of such talks, and in
the absence of specific information confirmed by the parties, S&P
expects to complete its CreditWatch review in early November--and
not await the outcome of any current discussions.
GMAC COMMERCIAL: Fitch Holds 'B+' Cert. Rating; On Stable Outlook
-----------------------------------------------------------------
Fitch Ratings has affirmed and assigned Rating Outlooks to GMAC
Commercial Mortgage Securities, Inc.'s mortgage pass-through
certificates, series 1999-C1 as:
-- $117.2 million class A-2 at 'AAA'; Outlook Stable;
-- Interest only class X at 'AAA'; Outlook Stable;
-- $66.7 million class B at 'AAA'; Outlook Stable;
-- $66.7 million class C at 'AAA'; Outlook Stable;
-- $86.7 million class D at 'AAA'; Outlook Stable;
-- $20 million class E at 'AAA'; Outlook Stable;
-- $83.4 million class F at 'A-'; Outlook Positive;
-- $13.3 million class G at 'BBB'; Outlook Stable;
-- $26.7 million class H at 'B+'; Outlook Stable.
The $20 million class J remains at 'CCC/DR2'. The $2.4 million
class K-1 is not rated by Fitch. Class A-1 has been paid in full.
Although credit enhancement levels have increased since Fitch's
last rating action, Fitch expected losses have also increased and
adverse selection among the remaining loans warrant affirmations
of the current ratings. The Rating Outlooks reflect the likely
direction of the rating changes over the next one to two years.
As of the Oct. 2008 distribution date, the transaction's aggregate
principal balance has decreased 62.3%, to $503.2 million from
$1.33 billion at issuance. Thirty loans (29.1%) are defeased,
including the partially defeased third largest loan in the pool
(1.5%). Ninety-eight loans remain in the pool, decreased from 228
at issuance.
Currently, six assets (3.3%) are in special servicing with losses
expected on three. The largest specially serviced asset (1.7%) is
secured by two healthcare facilities with a total of 230 beds in
Texas. The loan had a maturity date of Oct. 1, 2008, but the
borrower failed to pay off the loan. The special servicer is
formulating a workout strategy. The servicer reported year end
2007 debt service coverage ratio was 2.34 times with the occupancy
rate at 82.7%, compared to a DSCR of 2.12x with an occupancy rate
of 90% at issuance.
The second largest specially serviced asset (0.8%) is secured by a
102,034 square foot industrial property in Duluth, Georgia. The
loan was transferred to special servicing due to an imminent
default as the borrower has indicated that it will be unable to
payoff the loan at the Nov. 10, 2008 maturity date. The borrower
has requested a loan extension to provide additional time to
refinance. The servicer reported YE07 DSCR was 0.93x with the
occupancy rate at 74.7%, compared to a DSCR of 1.72x with an
occupancy rate of 99% at issuance.
In addition to the six specially serviced assets, Fitch has
identified 15 additional loans of concern (8.7%) due to declining
performance. The largest Fitch loan of concern is secured by a
272 unit apartment complex located in Wilsonville, Oregon. The
servicer reported year end 2007 was 0.97x, compared to a DSCR of
1.7x at issuance. The decline in DSCR was primarily due to the
increase in operating expenses. The property is currently
offering concessions to attract new tenants. As of the end of
June 2008, occupancy rate was 93%, compared to 97% at issuance.
The second largest Fitch loan of concern is secured by a 60,000 SF
retail center in Murray, Utah. One of two original tenants,
Staples, which occupied 39% of the center, vacated its space in
2002 and sublet the space to a home furnishing store. Staples
will continue to pay the rent until their lease expires in July
2013. The other tenant, Linens 'N' Things, vacated the space in
August 2008 due to bankruptcy filing. The borrower is actively
marketing the space. The servicer reported YE07 DSCR was 1.63x,
compared to 1.36x at issuance.
The largest remaining loan (11.9%) is secured by an office
property in Sunnyvale, California. It is currently 100% occupied
by a single tenant.
Thirty-seven loans (31.9%) are scheduled to mature in 2008, six of
which (3%) have already passed their maturity date. Five loans
(11.9% of the pool) are fully or partially defeased. The coupon
on the 22 non-defeased loans ranges from 5.83% to 7.84% with the
weighted average coupon at 6.62%. The servicer reported YE07 DSCR
ranges from 0.16x to 3.31x with the WADSCR at 1.63x.
GMACM HOME: Worsening Performance Cues Moody's To Cut Certs. Rtngs
------------------------------------------------------------------
Moody's Investors Service has downgraded certain certificates
issued by GMACM Home Equity Loan Trust. The transactions are
backed by second lien loans. The certificates were downgraded
because the bonds' credit enhancement levels, including excess
spread and subordination were too low compared to the current
projected loss numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Moody's Investors Service also takes action on certain insured
notes as identified below. The ratings on securities that are
guaranteed or "wrapped" by a financial guarantor is the higher of
a) the rating of the guarantor or b) the published underlying
rating.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
below notes are consistent with Moody's practice of rating insured
securities at the higher of the guarantor's insurance financial
strength rating and any underlying rating that is public.
Issuer: GMACM Home Equity Loan Trust 2007-HE2
-- Class Description: Class A-1
-- Current Rating: Downgraded to Baa3 from A1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Baa3 from A1
Class Description: Class A-2
-- Current Rating: Downgraded to Ba1 from A2
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Ba1 from A2
Class Description: Class A-3
-- Current Rating: Downgraded to Ba3 from Baa1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Ba3 from Baa1
Class Description: Class A-4
-- Current Rating: Downgraded to B1 on review for possible
downgrade from Baa2
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Caa1 from Baa2
Class Description: Class A-5
-- Current Rating: Downgraded to B1 on review for possible
downgrade from Baa2
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Caa1 from Baa2
Class Description: Class A-6
-- Current Rating: Downgraded to B1 on review for possible
downgrade from Baa2
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Caa1 from Baa2
Issuer: GMACM Home Equity Loan Trust 2007-HE3
-- Cl. I-A-1, Downgraded to Baa1 from Aaa
-- Cl. I-A-2, Downgraded to Baa2 from Aaa
-- Cl. II-A-1, Downgraded to Ba1 from Aaa
-- Cl. II-A-2, Downgraded to Ba3 from Aaa
-- Cl. M-1, Downgraded to B1 from Aa2
-- Cl. M-2, Downgraded to Ca from A2
Issuer: GMACM Home Equity Loan Trust 2006-HE5
Class Description: Class I-A-1
-- Current Rating: Downgraded to Ba3 from A1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Ba3 from A1
Class Description: Class II-A-2
-- Current Rating: Downgraded to B1 from Baa1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to B1 from Baa1
Issuer: GMACM Home Equity Loan Trust 2006-HE3
Class Description: Class A-1
-- Current Rating: Downgraded to Baa3 from A1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Baa3 from A1
Class Description: Class A-2
-- Current Rating: Downgraded to Ba1 from A1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Ba1 from A1
Class Description: Class A-3
-- Current Rating: Downgraded to Ba3 from A2
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Ba3 from A2
Class Description: Class A-4
-- Current Rating: Downgraded to B1 on review for possible
downgrade from Baa1
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to B2 from Baa1
Class Description: Class A-5
-- Current Rating: Downgraded to B1 on review for possible
downgrade from Baa2
Financial Guarantor: Financial Guaranty Insurance Company (B1, on
review for possible downgrade)
-- Underlying Rating: Downgraded to Caa1 from Baa2
GS MORTGAGE: Fitch Affirms $18.9MM Class Q Loan Rating at 'B-'
--------------------------------------------------------------
Fitch Ratings downgraded and assigned Outlooks to GS Mortgage
Securities Corporation II, series 2007-GG10 as:
-- $94.5 million class J to 'BBB-' from 'BBB'; Outlook Negative;
-- $75.6 million class K to 'BB+' from 'BBB-'; Outlook Negative;
-- $37.8 million class L to 'BB' from 'BB+'. Outlook Negative;
-- $18.9 million class M to 'BB-' from 'BB'; Outlook Negative;
-- $28.4 million class N to 'B+' from 'BB-'; Outlook Negative;
-- $18.9 million class O to 'B' from 'B+'; Outlook Negative;
-- $18.9 million class P to 'B-' from 'B'; Outlook Negative;
In addition, Fitch affirmed these classes:
-- $72.4 million class A-1 at 'AAA'; Outlook Stable;
-- $725.3 million class A-2 at 'AAA'; Outlook Stable;
-- $246.6 million class A-3 at 'AAA'; Outlook Stable;
-- $72.0 million class A-AB at 'AAA'; Outlook Stable;
-- $3,661.0 million class A-4 at 'AAA'; Outlook Stable;
-- $514.0 million class A-1A at 'AAA'; Outlook Stable;
-- $756.3 million class A-M at 'AAA'; Outlook Stable;
-- $519.9 million class A-J at 'AAA'; Outlook Stable;
-- Interest-only class X at 'AAA'; Outlook Stable;
-- $75.6 million class B at 'AA+'; Outlook Stable;
-- $94.5 million class C at 'AA'; Outlook Stable;
-- $56.7 million class D at 'AA-'; Outlook Negative;
-- $56.7 million class E at 'A+'; Outlook Negative;
-- $75.6 million class F at 'A'; Outlook Negative;
-- $75.6 million class G at 'A-'; Outlook Negative;
-- $104.0 million class H at 'BBB+'; Outlook Negative;
-- $18.9 million class Q at 'B-'; Outlook Negative.
Fitch does not rate the $141.8 million class S.
The downgrades of classes J through P are due the significant
concentration of Fitch loans of concern (29.2%). Rating Outlooks
reflect the likely direction of any rating changes over the next
one to two years. As of the September 2008 distribution date, the
transaction has paid down by 0.03% to $7.560 billion from
$7.563 at issuance. Two loans (1.2%) are in special servicing.
The larger specially serviced loan (0.64%) is secured by a
portfolio of 11 cross-collateralized, cross-defaulted limited and
full service hotels totaling 2,187 rooms and located across seven
states throughout the Midwest, East, and Southeast. The loan was
transferred to special servicing in April 2008 due to imminent
monetary default. The borrower continued to pay debt service
through August 2008 but defaulted in September 2008. The borrower
has been delinquent with its franchisors and has not provided
adequate financial statements or business plans.
The second specially serviced loan (0.57%) is a 561 unit
multifamily property located in Georgia. The loan was transferred
to special servicing on July 2, 2008 due to monetary default. The
property is now posted for foreclosure.
Fitch loans of concern (29.2%) include several loans back by
transitional assets (12.5%) whose performance has declined since
issuance as well as loans with debt service shortfalls and no
remaining reserves. At issuance, the transitional assets, which
are located in several markets, were expected to benefit from
rental growth due to below market lease turnover which has yet to
materialize. The third, ninth and 10th largest loans (10.5%) are
considered Fitch loans of concern due to low servicer reported
year-end 2007 DSCRs.
The third largest loan, Two California Plaza (6.2%), is
collateralized by an office property located in Los Angeles,
California. The sponsor is Maguire Properties, Inc. As of year
end 2007, the servicer reported debt service coverage ratio was
0.74 times compared to a DSCR at issuance of 1.20x. At issuance,
a $3.0 million debt service reserve was established, which has
been depleted.
The ninth largest loan, 550 South Hope Street (2.2%), is
collateralized by an office building located in Los Angeles,
California, whose sponsor is also Maguire Properties, Inc. As of
YE07, the DSCR was 0.45x compared to a DSCR of 1.23x at issuance.
Increased rental income is expected at the property as the current
tenants roll to market levels. However, lease expirations for
2008, 2009, 2010 are 9.0%, 11.4% and 10.1%, respectively and the
current market vacancy is 12.5%. Occupancy at issuance was 89.3%
compared to YE07 occupancy of 95.4%. At issuance, a $4.5 million
debt service reserve was established, of which $1.4 million
remains.
Finally, the 10th largest loan, Harbor Point Apartments (2.1%), is
collateralized by a multifamily property located in Boston,
Massachusetts. Sponsorship includes CMJ, Keen Development Corp.,
and Cruz Columbia Point, Inc. As of YE07, the DSCR was 0.96x
compared to a DSCR at issuance of 1.15x. The low DSCRs are
primarily the result of tenants paying below-market rents. At
issuance, the loans income was based on a stabilization plan of
increasing rent and rental growth in future years which may not
occur as expected due to current market conditions. In addition,
the property includes 400 units of subsidized housing. At
issuance, the loan was structured with a $2.9 million debt service
reserve and the remaining balance is $2.7 million.
The Shorenstein Portland Portfolio (9.2%) is the largest loan in
the transaction. It is secured by 46 office buildings with a
total of 3.8 million square feet. The buildings are located
throughout the greater Portland area. The loan has exhibited
improved performance since issuance. The loan's DSCR and
occupancy at issuance were 1.34x and 94.1%. As of YE 2007, the
servicer-reported DSCR has increased to 1.37x and occupancy was
86.6%. The loan matures on April 6, 2017.
The transaction has minimal near-term maturity risk as none of the
loans mature prior to 2011 and 85.6% of the pool matures in 2017.
Fitch will continue to closely monitor the loans of concern to
determine whether planned rental growth will be realized.
GWLS HOLDINGS: Ct. Sets Nov. 7 Hearing on Proposed Bid Procedures
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
has scheduled a hearing on Nov. 7, 2008, to consider the proposed
Bidding Procedures in connection with GWLS Holdings Inc., and its
debtor-affiliates' motion for the sale of substantially all of
their assets, free and clear of liens, claims, encumbrances, and
interests. Responses or objections, if any, to the proposed
Bidding Procedures must be filed on or before Nov. 5, 2008.
As reported in the Troubled Company Reporter on Oct. 27, 2008,
pursuant to the terms of the asset purchase agreement with the
Debtor's first lien lenders, NEWCO LLC, an acquisition vehicle to
be formed by the lenders, will credit bid up to 90% of the
Debtors' outstanding principal, interest and Letters of Credit
issued under the first lien credit agreement.
Headquartered in Dallas, Texas, GWLS Holdings Inc. --
http://www.greatwide.com/-- operate trucking and logistics
company. The company and 50 of its affiliates filed for Chapter
11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No.
08-12430). Robert S. Brady, Esq., and Matthew B. Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP; Matt A. Feldman, Esq., Paul
V. Shalhoub, Esq., and Robin Spigel, Esq., at Willkie Farr
Gallagher LLP, represent the Debtors' as co-counsel. Miller
Buckfire & Co., LLC, is the Debtors' financial advisor. When the
Debtors filed sought bankruptcy protection from their creditors,
they listed assets and debts between $500 million and $1 billion
each.
GWLS HOLDINGS: May Employ Kurtzman Carson as Claims Agent
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
approved GWLS Holdings Inc., and its debtor-affiliates' employment
of Kurtzman Carson Consultants LLC ("KCC"), as the Court's
official claims and solicitation agent in their bankruptcy cases,
effective as of the petition date.
As the Court's official claims and solicitation agent in the
Debtors' bankruptcy cases, KCC shall:
a) prepare and serve required notices in these Chapter 11 cases,
which may include, but are not limited to:
i) notice of commencement of the Chapter 11 cases and the
initial meeting of creditors pursuant to Sec. 341(a) of
the Bankruptcy Code;
ii) notice of the claims bar date, if any;
iii) notice of objections to claims;
iv) notice of any hearings on a disclosure statement and
confirmation of any plans of reorganization; and
v) other miscellaneous notices to any entities, as the
Debtors or the Court may deem necessary or appropriate
for an orderly administration of the Chapter 11 cases;
b) after the mailing of a particular notice, prepare for filing
with the Court a certificate or affidavit of service that
includes an alphabetical list of persons to whom the notice
was mailed and the date and manner of mailing;
c) receive and record proofs of claim and proofs of interest
filed;
d) create and maintain official claims registers, including,
among other things, the following information for each proof
of claim or proof of intrest:
i) the name of the Debtor;
ii) the name and address of the claimant and any agent
thereof, if the proof of claim or proof of interest was
filed by an agent;
iii) the date received;
iv) the claim number assigned; and
v) the asserted amount and classification of the claim;
e) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
f) transmit to the Clerk's Office a copy of the claims registers
upon request or at agreed upon intervals;
g) act as balloting agent, which will include the following
services:
i) print ballots including the printing of color-coded,
creditor- and shareholder- specific ballots;
ii) prepare voting reports by plan class, creditor or
shareholder and amount for review and approval by the
Debtors and their counsel;
iii) coordinate mailing of ballots, disclosure statement and
plan of reorganization or other appropriate materials to
all voting and non-voting parties and provide affidavit
of service;
iv) establish a toll-free "800" number to receive questions
regarding voting on the plan; and
v) receive and tabulate ballots, inspect ballots for
conformity to voting procedures, date stamp and number
ballots consecutively, provide computerized balloting
database services and certify the tabulation results;
h) maintain an up-to-date mailing list for all entities that
have filed a proof of claim or proof of interest, which
list shall be available upon request of a party-in-interest
or the Clerk's Office;
i) provide access to the public for examination of copies of the
proofs of claim or interest without charge during regular
business hours;
j) record all transfers of claims pursuant to Bankruptcy Rule
3001(e) and provide notice of such transfers as required by
Bankruptcy Rule 3001(e);
k) comply with applicable federal, state, municipal, and local
statutes, ordinances, rules, regulations, orders and other
requirements;
l) provide temporary employees to process claims, as necessary;
m) promptly comply with such further conditions and requirements
as the Clerk's Office or the Court may at any time prescribe;
and
n) perform such other administrative and support services
related noticing, claims, docketing, solicitation and
distribution as the Debtors or the Clerk's Office may
request.
In addition to the foregoing, KCC will assist with the
administrative tasks associated with the: (a) reconciliation of
claims; (b) preparation of their schedules of assets and
liabilities and statement of financial affairs; and (c)
preparation, mailing and tabulation of ballots for the purpose of
voting to accept or reject any plans of reorganization proposed by
the Debtors in these case.
To the best of the Debtors' knowledge, KCC is a "disinterested
person" within the meaning of Sec. 101(14) of the Bankruptcy Code,
and does not hold or represent any interest adverse to the Debtors
or their estates.
The cost of KCC's services, as set forth in its Engagement
Agreement with the Debtors, will be paid from the Debtors' estates
as provided under Sections 156(c) and 503(b)(1)(A) of the
Bankruptcy Code. Prior to the Petition Date, the Debtors paid KCC
a retainer in the amount of $50,000.
Headquartered in Dallas, Texas, GWLS Holdings Inc. --
http://www.greatwide.com/-- operate trucking and logistics
company. The company and 50 of its affiliates filed for Chapter
11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No.
08-12430). Robert S. Brady, Esq., and Matthew B. Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP; Matt A. Feldman, Esq., Paul
V. Shalhoub, Esq., and Robin Spigel, Esq., at Willkie Farr
Gallagher LLP, represent the Debtors' as co-counsel. Miller
Buckfire & Co., LLC, is the Debtors' financial advisor. When the
Debtors filed sought bankruptcy protection from their creditors,
they listed assets and debts between $500 million and $1 billion
each.
GWLS HOLDINGS: May Obtain Interim DIP Financing of up to $45MM
--------------------------------------------------------------
GWLS Holdings Inc. and its debtor-affiliates obtained permission
from the U.S. Bankruptcy Court for the District of Delaware for
Greatwide Logistics Services, Inc. ("GLS"), on an interim basis,
to secure postpetition financing of up to $45 million pursuant to
the terms of the DIP Facility Agreement, and to use Cash
Collateral, up to the amount of the Commencement Date Cash, for
the operation of their businesses in accordance with the 13-Week
Budget.
Upon the Debtors' use of the amount of Commencement Date Cash,
provided the conditions precedent under the DIP Facility Agreement
are met, the Debtors may use Advances, proceeds of Collateral and
any Prepetition Secured Parties' Cash Collateral to fund the
Debtors' operation of their businesses in accordance with the
terms of the DIP Facility.
The Debtors told the Court that the interim financing and use of
Cash Collateral is vital to avoid immediate irreparable harm to
the Debtors' business, properties and estates and to allow the
orderly continuation of the Debtors' businesses.
The Debtors also told the Court that they are unable to obtain
sufficient financing from sources other that the DIP Facility
Lenders on terms more favorable than under the DIP Facility and
have been unable to obtain sufficient unsecured credit solely
under Sec. 503(b)(1) of the Bankruptcy Code as an administrative
expense.
Final Hearing
The Court has set a final hearing for Nov. 24, 2008, to consider
the Debtors' request for authority to obtain DIP financing of up
to $73.6 million, and use of Cash Collateral. The proposed DIP
Facility will be used to fund the Debtors' operating, working
capital and capital expenditure needs during the course of their
Chapter 11 cases.
Superpriority Claim
The DIP Facility Lenders and the DIP Facility Agent are granted,
pursuant to Sec. 364(c)(1) of the Bankruptcy Code, subject only to
the Carve-Out, the allowed DIP Facility Superpriority Claims
which claims shall be payable from and have recourse to, in
addition to the Collateral, any unencumbered prepetition or
postpetition property of the Debtors whether now existing or
hereafter acquired; provided however, the DIP Facility
Superpriority Claims shall not be payable from any Avoidance
Actions unless approved in the Final Order.
Adequate Protection
As adequate protection for the diminution in Prepetition
Collateral as a result of the use of Cash Collateral, the Lenders
are granted replacement lien in the Collateral, subject only to
the Carve-Out, and an allowed administrative claim against the
Debtors' estates under Sec. 507(b) of the Bankruptcy Code to the
extent that the Replacement Liens do not adequately protect the
diminution in the value of the Prepetition Collateral, which
allowed adminstrative claim, if any, shall be junior and
subordinate only to the DIP Facility Superpriority Claims.
Security
As security for the repayment of the Postpetition Indebtedness,
pursuant to Sections 364(c)(2), (c)(3), and (d) of the Bankruptcy
Code, the DIP Administrative Agent, on behalf of itself and the
DIP Facility Lenders, is granted the DIP Facility Liens on and in
the Collateral and all proceeds thereof. The DIP Facility Liens
shall be senior in all respects to the Prepetition Liens and the
Replacement Liens pursuant to Sec. 364(d) of the Bankruptcy Code.
Carve-Out
The DIP Facility Liens, DIP Facility Superpriority Claim, the
Adequate Protection and liens and claims held by the Prepetition
Secured parties shall be subject to a Carve-Out for the payment of
(i) unpaid fees of the Clerk of the Bankruptcy Court and the U.S.
Trustee; (ii) allowed professional fees and expenses of the
Debtors and the Official Committee of Unsecured Creditors; (iii)
Professional Fees incurred subsequent to delivery of the Carve-Out
Notice in an aggregate amount not to exceed $1,950,000.
Prepetition Facilities
The Debtor's prepetition credit facilities consist of:
1) a secured first lien facility in the original principal
amount of $370 million, comprised of a term loan of
$300 million and a revolving credit facility (including a
letter of credit sub-facility) of $70 million.
As of Sept. 30, 2008, the outstanding principal amount under
the First Lien Term Loan was $296.25 million, and the
outstanding principal amount under the First Lien Revolving
Credit Facility was $69,923,640, inclusive of $31,523,640 in
outstanding letters of credit.
The First Lien Credit Facility is secured by substantially
all of the assets, pledges of 100% of the capital stock, and
the guarantee of GWLS and the majority of its subsidiaries.
2) a secured second lien term loan in the original principal
amount of $117 million, which is secured by substantially all
of the assets and the guarantee of GWLS and the
majority of its subsidiaries.
3) a $107 million unsecured mezzanine credit facility, which is
unsecured and is not guaranteed by any of the Debtors. As of
Sept. 30, 2008, the outstanding principal amount under the
Mezzanine Facility was $107 million, inclusive of accrued
"PIK" interest under the Mezzanine Facility.
Summary of Principal Terms of the DIP Credit Agreement
Borrower: Greatwide Logistics Services, Inc.
Guarantors: GWLS and all of the existing and future
direct and indirect domestic and foreign
subsidiaries of Borrower.
Administrative
Agent and Issuing
Lender: UBSA AG, Stamford Branch
Collateral Agent: General Electric Capital Corp.
Documentation
Agent, Syndication
Agent and Bookrunner: UBS Securities LLC
Joint Lead Arrangers: UBS Securities LLC and Ableco Finance LLC
Lenders: The several lenders from time to time party
to the DIP Credit Agreement, as provided
therein.
Type and Amount of
Facilities: A delayed draw term credit of up to
$73.6 million in the aggregate.
Purpose: Amounts available under the DIP Facility
shall be used in a manner consistent in all
material respects with the 13-Week Budget
for the payment of (i) postpetition
operating and other working capital
requirements, (ii) certain transaction fees,
costs and expenses, (iii) certain
prepetition claims as may be approved by the
Lead Arranger and the Required Lenders and
allowed by the Court, and (iv) amounts
necessary to cash collateralize Term Loan
Letters of Credit.
DIP Budget: The budget of the Borrower and the
Guarantors for the period commencing Nov. 1,
2008, and through and including Dec. 31,
2008, in form and substance satisfactory to
the Lead Arranger and the Required Lenders.
13-Week Budget: The budget prepared by the Borrower on a
rolling 13 week basis projecting the cash
receipts, operating disbursements, payroll
disbursements, non-operating disbursements
and cash balances of the Borrwer and
Guarantors in form and substance acceptable
to the Lead Arranger and the Required
Lenders.
Final Maturity Date: The DIP Facility shall terminate on the
earliest of (i) the date on which the
outstanding balance of the Term Loans have
been repaid in full in cash, (ii) March 31,
2009 (subject to extension to Dec. 31, 2009
if approved by the Administrative Agent,
Lead Arranger and the Required Lenders),
(iii) the closing date of a sale pursuant to
Sec. 363 of the Bankruptcy Code of
substantially all of the Debtor's assets in
the Bankruptcy Cases, (iv) the effective
date of a confirmed plan of reorganization
in the Chapter 11 Case, (v) the date of
dismissal of the Chapter 11 Case or a
conversion of the Chapter 11 Case of the
Borrower to Chapter 7 of the Bankruptcy
Code, and (vi) the date of the Commitment.
Interest Rate: Loans will bear interest at the Base Rate
(defined as greater of (a) 5.25% and (b) the
greater of (i) the "Federal Funds Rate" plus
3.00% and (ii) the prime commercial lending
rate of UBS AG, Stamford Branch plus the
Applicable Margin of 6.00%.
Headquartered in Dallas, Texas, GWLS Holdings Inc. --
http://www.greatwide.com/-- operate trucking and logistics
company. The company and 50 of its affiliates filed for Chapter
11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No.
08-12430). Robert S. Brady, Esq., and Matthew B. Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP; Matt A. Feldman, Esq., Paul
V. Shalhoub, Esq., and Robin Spigel, Esq., at Willkie Farr
Gallagher LLP, represent the Debtors' as co-counsel. Miller
Buckfire & Co., LLC, is the Debtors' financial advisor. When the
Debtors filed sought bankruptcy protection from their creditors,
they listed assets and debts between $500 million and $1 billion
each.
HANOVER CAPITAL: Amends Merger Agreement with JWH Holding
---------------------------------------------------------
Hanover Capital Mortgage Holdings, Inc., disclosed in a Securities
and Exchange Commission filing that on Oct. 28, 2008, it entered
into an Amended and Restated Agreement and Plan of Merger with
Walter Industries, Inc., its direct wholly owned subsidiary, JWH
Holding Company, LLC, which amends and restates the Agreement and
Plan of Merger, dated Sept. 30, 2008, among HCM, Walter and Spinco
pursuant to which Spinco will merge into HCM.
Following completion of the merger, the separate existence of
Spinco will cease, and HCM will continue as the surviving
corporation.
HCM, Walter, and Spinco entered into the Amended and Restated
Merger Agreement to simplify and clarify the formula used to
determine the number of shares of Surviving Corporation common
stock to be issued in the merger. This modification will not
change the relative post-merger ownership of the Surviving
Corporation by holders of equity interests in HCM and Spinco,
respectively, and, therefore, it will continue to be the case
that, as a result of the merger, and subject to certain
adjustments, immediately after the effective time of the merger,
holders of common stock of Walter on the record date for the spin-
off (by virtue of their ownership of limited liability company
interests in Spinco after the spin-off) and certain holders of
options to acquire limited liability company interests in Spinco
will collectively own 98.5%, and HCM stockholders will
collectively own 1.5%, of the shares of common stock of the
Surviving Corporation outstanding or reserved for issuance in
settlement of restricted stock units of the Surviving Corporation.
It will also continue to be the case that, in the merger, every
50 shares of HCM common stock outstanding immediately prior to the
effective time of the merger will be combined into one share of
Surviving Corporation common stock.
About Hanover Capital
Based in Edison, N.J., Hanover Capital Mortgage Holdings Inc.
(AMEX: HCM) -- http://www.hanovercapitalholdings.com/-- is a
mortgage real estate investment trust. The company invests in
prime mortgage loans and mortgage securities backed by prime
mortgage loans.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 10, 2008,
Grant Thornton LLP, in New York, expressed substantial doubt about
Hanover Capital Mortgage Holdings Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the years ended Dec. 31, 2007, and 2006. The
auditing firm pointed to the company's net loss for the year ended
Dec. 31, 2007, which included $76.0 million in impairment losses
on mortgage-backed securities.
Due to unprecedented turmoil in the mortgage and capital markets
during 2007 and into 2008, the company incurred a significant loss
of liquidity over a short period of time. The company experienced
a net loss of approximately $46.3 million for the six months ended
June 30, 2008, and its current operations are not cash flow
positive. Additional sources of capital are required for the
company to generate positive cash flow and continue operations
beyond 2008.
The Troubled Company Reporter reported on Aug. 27, 2008, Hanover
Capital Mortgage Holdings Inc. disclosed its financial results for
the three and six months ended June 30, 2008. At June 30, 2008,
the company's consolidated balance sheet showed $62.2 million in
total assets, $134.1 million in total liabilities, resulting in a
$71.9 million stockholders' deficit.
HCA INC: Amends Restoration Plan to Exclude SERP Executives
-----------------------------------------------------------
HCA Inc. disclosed in a Securities and Exchange Commission filing
that on Oct. 22, 2008, it executed an amendment and restatement,
effective Jan. 1, 2008, to the company's Restoration Plan.
Prior to 2008, the Restoration Plan provided a benefit to the
company's highly paid employees to replace the lost contributions
under the HCA Retirement Plan due to the IRS compensation limit
under Internal Revenue Code Section 401(a)(17).
The amendments to the Restoration Plan, among other things:
-- amend the benefit formula, in connection with the merger of
the HCA Retirement Plan and HCA 401(k) Plan, to provide for
contributions to eligible employees ranging from 1.5% to
4.5% with respect to compensation in excess of the Social
Security Wage Base but not in excess of the Internal Revenue
Code Section 401(a)(17) limit for the year and from 3% to 9%
with respect to compensation in excess of the Internal
Revenue Code Section 401(a)(17) limit; and
-- make the company's executive officers who participate in the
company's SERP ineligible to participate in the Restoration
Plan.
About HCA Inc.
Headquartered in Nashville, Tennessee, HCA Inc. --
http://www.hcahealthcare.com/-- is the nation's leading provider
of healthcare services. As of June 30, 2008, HCA operated 169
hospitals and 107 freestanding surgery centers, including eight
hospitals and eight freestanding surgery centers operated through
equity method joint ventures.
At June 30, 2008, the company's consolidated balance sheet showed
$24.07 billion in total assets and $33.13 billion in total
liabilities, $959.0 million in minority interests, and
$163.0 million in equity securities with contingent redemption
rights, resulting in a $10.18 billion shareholders' deficit.
Net income for the second quarter of 2008 totaled $141.0 million,
compared to $116.0 million in the prior year's second quarter.
Results for the second quarter of 2008 include losses on sales of
facilities of $11.0 million compared to gains of $11.0 million in
the second quarter of 2007. Also, second quarter 2008 results
include an impairment of long-lived assets of $9.0 million
compared to a $24.0 million asset impairment in the same period of
2007.
* * *
As reported in the Troubled company Reporter on May 23, 2008,
Fitch Ratings affirmed HCA Inc.'s Issuer Default Rating at 'B';
Secured bank credit facility at 'BB/RR1'; and Senior unsecured
notes at 'CCC+/RR6'.
HCA INC: Inks Amended Employment Deal with Ex-CEO Bovender
----------------------------------------------------------
HCA Inc. disclosed in a Securities and Exchange Commission filing
that in connection with the retirement of Jack O. Bovender, Jr.,
as Chief Executive Officer and continued employment as executive
Chairperson of the company, it entered into an Amended and
Restated Employment Agreement with Mr. Bovender on Oct. 27, 2008.
Pursuant to the terms of the Amended Employment Agreement, Mr.
Bovender will continue to be employed by HCA Management Services,
L.P., an affiliate of the company, and shall serve as executive
Chairperson of the company for a period commencing Dec. 31, 2008,
and ending Dec. 15, 2009.
Pursuant to the Amended Employment Agreement, Mr. Bovender will
receive a base salary (i) at the monthly rate of $135,000 for the
first three months of the Employment Term and (ii) at the monthly
rate of $86,957 for the next eight and one-half months of the
Employment Term. In addition, Mr. Bovender shall be entitled to
the full amount of any annual bonus earned, but unpaid, as of the
effective date of the Amended Employment Agreement for the year
ended December 31, 2008 under the company's 2008-2009 Senior
Officer Performance Excellence Program. For calendar year 2009,
Mr. Bovender shall be eligible to earn a bonus on substantially
the terms previously disclosed except that his "target bonus"
shall be reduced to $500,000.
Mr. Bovender shall also have an additional 2009 bonus opportunity
of up to $250,000 based upon the achievement of other objectives,
to be determined by the compensation committee of the company.
The Amended Employment Agreement provides that Mr. Bovender may,
by Dec. 31, 2008, change any previously-filed election regarding
distributions from the company's Supplemental Executive Retirement
Plan, as amended, in order to elect to receive a distribution as a
lump sum (or to begin to receive distributions as an annuity)
during April of 2009. The Amended Employment Agreement provides
that Mr. Bovender will accrue benefits under the SERP through
March 31, 2009. The Amended Employment Agreement generally
provides for the provision of or reimbursement of expenses
associated with office space, shared clerical support and office
equipment until Mr. Bovender reaches age 70.
Pursuant to the Amended Employment Agreement, effective as of the
expiration of the Employment Term or Mr. Bovender's sooner
voluntary termination for any reason, Mr. Bovender would be
entitled to receive:
-- any Base Salary that is earned and unpaid through the date
of termination;
-- any annual bonus earned, but unpaid, for the year ended
Dec. 31, 2008, under the PEP as of the date of termination;
-- a pro rata portion of any 2009 annual bonus that
Mr. Bovender would have been entitled to receive pursuant to
the Amended Employment Agreement based upon the company's
actual results for 2009. Additionally, in the event the
Additional Bonus has not been earned as of the termination
date, the compensation committee of the company shall
consider in good faith whether or not all or a portion of
such Additional Bonus shall be included as part of the
Prorated Bonus;
-- reimbursement of any unreimbursed business expenses properly
incurred;
-- continued coverage under the company's group health plans
for Mr. Bovender and his wife until age 65; and
-- such employee benefits, if any, as to which Mr. Bovender may
be entitled under the company's employee benefit plans.
The Amended Employment Agreement further provides that, effective
as of the expiration of the Employment Term or Mr. Bovender's
sooner voluntary termination for any reason:
-- neither Mr. Bovender nor the company shall have any put or
call rights with respect to Mr. Bovender's options under the
2006 Stock Incentive Plan For Key Employees of HCA Inc. and
its Affiliates or stock acquired upon the exercise of any
such options;
-- Mr. Bovender's "rollover" stock options will remain
exercisable as if Mr. Bovender's employment terminated by
reason of "retirement" in accordance with the terms of the
applicable equity plans and award agreements;
-- the unvested New Options held by Mr. Bovender that vest
solely based on the passage of time will vest as if Mr.
Bovender's employment had continued through the next three
anniversaries of their date of grant;
-- the unvested New Options held by Mr. Bovender that are
EBITDA performance options will remain outstanding and will
vest, if at all, on the next four dates that they would have
otherwise vested had Mr. Bovender's employment continued,
based upon the extent to which performance goals are met;
-- the unvested New Options held by Mr. Bovender that are
"Investor Return" performance options will remain
outstanding and will vest, if at all, on the dates that they
would have otherwise vested had Mr. Bovender's employment
continued through the expiration of such options, based upon
the extent to which performance goals are met; and
-- Mr. Bovender's New Options will remain exercisable until the
second anniversary of the last date on which his EBITDA
performance options are eligible to vest, which is
Dec. 31, 2014, except that (a) Mr. Bovender's 2x Time
Options will remain exercisable until the fifth anniversary
of the last date on which his EBITDA performance options are
eligible to vest, which is Dec. 31, 2017, and (b) Mr.
Bovender's "Investor Return" performance options will remain
exercisable until the expiration of such options.
If Mr. Bovender's employment is terminated by the company without
"cause" or by Mr. Bovender for "good reason," he would be entitled
to receive the benefits described in the preceding two paragraphs
and, subject to the delivery of a customary release and continued
compliance with the noncompetition, nonsolicitation and
confidentiality restrictions in the Amended Employment Agreement,
an amount (if any) equal to Mr. Bovender's Base Salary that would
have been otherwise payable through the end of the Employment
Term.
If Mr. Bovender's employment is terminated by the company for
cause, he will be entitled to receive the amounts and benefits
described in the fourth paragraph of this section, except that Mr.
Bovender will not be entitled to receive the Prorated Bonus. Mr.
Bovender's vested New Options will, upon such event, remain
exercisable until the first anniversary of the termination of his
employment.
The other terms of the Amended Employment Agreement are
substantially the same as his prior employment agreement and as
previously disclosed, except as modified to reflect Mr. Bovender's
new responsibilities and retirement as Chief Executive Officer.
About HCA Inc.
Headquartered in Nashville, Tennessee, HCA Inc. --
http://www.hcahealthcare.com/-- is the nation's leading provider
of healthcare services. As of June 30, 2008, HCA operated 169
hospitals and 107 freestanding surgery centers, including eight
hospitals and eight freestanding surgery centers operated through
equity method joint ventures.
At June 30, 2008, the company's consolidated balance sheet showed
$24.07 billion in total assets and $33.13 billion in total
liabilities, $959.0 million in minority interests, and
$163.0 million in equity securities with contingent redemption
rights, resulting in a $10.18 billion shareholders' deficit.
Net income for the second quarter of 2008 totaled $141.0 million,
compared to $116.0 million in the prior year's second quarter.
Results for the second quarter of 2008 include losses on sales of
facilities of $11.0 million compared to gains of $11.0 million in
the second quarter of 2007. Also, second quarter 2008 results
include an impairment of long-lived assets of $9.0 million
compared to a $24.0 million asset impairment in the same period of
2007.
* * *
As reported in the Troubled company Reporter on May 23, 2008,
Fitch Ratings affirmed HCA Inc.'s Issuer Default Rating at 'B';
Secured bank credit facility at 'BB/RR1'; and Senior unsecured
notes at 'CCC+/RR6'.
HCA INC: Restates Supplemental Executive Retirement Plan
--------------------------------------------------------
HCA Inc. disclosed in a Securities and Exchange Commission filing
that on Oct. 22, 2008, it executed an amendment and restatement of
the Supplemental Executive Retirement Plan.
The SERP Restatement:
-- adds a lump-sum distribution option and, separately with
respect to retirement, death and disability, allows
participants to choose a benefit form of either lump-sum or
annuity by Dec. 31, 2008, making a lump-sum benefit form the
default option applicable to any participant who does not
timely elect a payment form;
-- recognizes payment form elections made prior to 2007 with
respect to retirement, death, and disability, subject to
override by any new election made by participants in 2008;
-- delays the initial payment of any distribution (or, sole
payment, for a lump-sum distribution) until the first day of
the month after six months have passed following termination
of a participant's employment;
-- with the exception of benefits payable on termination of the
SERP, does not "grandfather" pre-2005 benefits;
-- pays benefits that are granted at the discretion of the
Board of Directors or the compensation committee on the
first day of the month after six months following
termination of a participant's employment in the form of a
lump-sum distribution;
-- adopts the long-term Applicable Federal Rate and the
Internal Revenue Code Section 417(e)(3) mortality table as
the actuarial factors utilized to perform benefit
calculations;
-- provides for a lump-sum cash-out of benefits that do not
exceed $1,000,000, excluding consideration of FICA taxes;
-- includes provisions with respect to delays and acceleration
of distributions pursuant to the American Jobs Creation Act
of 2004;
-- applies the favorable early retirement factors to disability
and death benefits;
-- provides for the retirement of the company's current Chief
Executive Officer;
-- adds a claims and appeals procedures, with appeals being
handled by the Benefits Appeals Committee of the company;
-- provides that, with respect to all participants on
July 24, 2006, except as required by law, the SERP will not
be terminated and, subject to the SERP's limitations on
benefit accrual, benefit accruals will not cease on or after
the November 2006 leveraged buy-out merger of the company
until such time as all participants have become fully vested
(or have had the opportunity to become fully vested) in the
maximum benefits available as of July 24, 2006; and
-- adopts certain other changes necessitated by the AJCA.
About HCA Inc.
Headquartered in Nashville, Tennessee, HCA Inc. --
http://www.hcahealthcare.com/-- is the nation's leading provider
of healthcare services. As of June 30, 2008, HCA operated 169
hospitals and 107 freestanding surgery centers, including eight
hospitals and eight freestanding surgery centers operated through
equity method joint ventures.
At June 30, 2008, the company's consolidated balance sheet showed
$24.07 billion in total assets and $33.13 billion in total
liabilities, $959.0 million in minority interests, and
$163.0 million in equity securities with contingent redemption
rights, resulting in a $10.18 billion shareholders' deficit.
Net income for the second quarter of 2008 totaled $141.0 million,
compared to $116.0 million in the prior year's second quarter.
Results for the second quarter of 2008 include losses on sales of
facilities of $11.0 million compared to gains of $11.0 million in
the second quarter of 2007. Also, second quarter 2008 results
include an impairment of long-lived assets of $9.0 million
compared to a $24.0 million asset impairment in the same period of
2007.
* * *
As reported in the Troubled company Reporter on May 23, 2008,
Fitch Ratings affirmed HCA Inc.'s Issuer Default Rating at 'B';
Secured bank credit facility at 'BB/RR1'; and Senior unsecured
notes at 'CCC+/RR6'.
HCA INC: William Frist to Replace Thomas Frist as Director
----------------------------------------------------------
HCA Inc. disclosed in a Securities and Exchange Commission filing
that on Oct. 22, 2008, Dr. Thomas F. Frist, Jr. notified the Board
of Directors of HCA Inc. that he would resign from the company's
Board of Directors effective Jan. 1, 2009.
In connection with the resignation of Dr. Frist, the company's
Board of Directors has appointed William R. Frist to serve as a
member of the company's Board of Directors effective Jan. 1, 2009.
Mr. First is expected to serve on the company's Patient Safety and
Quality of Care Committee.
Mr. Frist is a principal of Frist Capital LLC, a private
investment vehicle for Mr. Frist and certain related persons and
has held such position since 2003. Mr. Frist is also a general
partner at Frisco Partners, another Frist family investment
vehicle. Mr. Frist is the son of Dr. Thomas F. Frist, Jr., who is
resigning from the Board of Directors effective Jan. 1, 2009, and
the brother of Thomas F. Frist, III, who also serves as a
director.
Mr. Frist was appointed as a director to fill the vacancy created
by Dr. Frist's resignation pursuant to the Amended and Restated
Limited Liability company Agreement of Hercules Holding II, LLC,
which gives the Frist family group the right to appoint two
managers to the company's Board of Directors.
On Oct. 22, 2008, the compensation committee of the company's
Board of Directors, in connection with the previously announced
appointment of Richard M. Bracken as the company's Chief Executive
Officer effective Jan. 1, 2009, approved an annual base salary for
Mr. Bracken of $1,325,000 and a 2009 Performance Excellence
Program target of 130% of Mr. Bracken's 2009 base salary,
effective Jan. 1, 2009.
About HCA Inc.
Headquartered in Nashville, Tennessee, HCA Inc. --
http://www.hcahealthcare.com/-- is the nation's leading provider
of healthcare services. As of June 30, 2008, HCA operated 169
hospitals and 107 freestanding surgery centers, including eight
hospitals and eight freestanding surgery centers operated through
equity method joint ventures.
At June 30, 2008, the company's consolidated balance sheet showed
$24.07 billion in total assets and $33.13 billion in total
liabilities, $959.0 million in minority interests, and
$163.0 million in equity securities with contingent redemption
rights, resulting in a $10.18 billion shareholders' deficit.
Net income for the second quarter of 2008 totaled $141.0 million,
compared to $116.0 million in the prior year's second quarter.
Results for the second quarter of 2008 include losses on sales of
facilities of $11.0 million compared to gains of $11.0 million in
the second quarter of 2007. Also, second quarter 2008 results
include an impairment of long-lived assets of $9.0 million
compared to a $24.0 million asset impairment in the same period of
2007.
* * *
As reported in the Troubled company Reporter on May 23, 2008,
Fitch Ratings affirmed HCA Inc.'s Issuer Default Rating at 'B';
Secured bank credit facility at 'BB/RR1'; and Senior unsecured
notes at 'CCC+/RR6'.
HC INNOVATIONS: Robert Walker Discloses Option to Buy 1MM Shares
----------------------------------------------------------------
Robert Scott Walker disclosed in a Securities and Exchange
Commission filing that he has option to purchase 1,000,000 shares
of HC Innovations, Inc.'s common stock at $0.635 apiece.
Mr. Walker serves as HC Innovation's chief financial officer.
About HC Innovations
Headquartered in Shelton, Conn., HC Innovations Inc. (OTC BB:
HCNV) -- http://www.hcinnovationsinc.com/-- is the holding
company for Enhanced Care Initiatives (ECI), which provides
complex care management services for medically unstable, complex
patients. These services are performed through a program of 24/7
clinical support and intensive interventions based on care plans
guided by a proprietary electronic health record (EHR) system.
The company targets its offering to HMOs, other risk-bearing
managed care organizations, state Medicaid departments, and as an
on-site subcontractor for disease management companies.
Going Concern Doubt
As reported in the Troubled company Reporter on April 29, 2008,
Carlin, Charron & Rosen, LLP, in Glastonbury, Conn., expressed
substantial doubt about HC Innovations Inc.'s ability to continue
as a going concern after auditing the company's consolidated
financial statements for the years ended Dec. 31, 2007, and 2006.
The auditing firm pointed to the company's negative working
capital, net losses for the two years then ended, and accumulated
deficit.
The Troubled company Reporter reported on Sept. 8, 2008, that HC
Innovations Inc.'s consolidated balance sheet at June 30, 2008,
showed $7,827,038 in total assets and $12,543,255 in total
liabilities, resulting in a $4,716,217 stockholders' deficit. At
June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $4,008,617 in total current assets
available to pay $12,126,389 in total current liabilities.
The company reported a net loss of $3,533,075 on net revenues of
$6,833,433 for the second quarter ended June 30, 2008, compared
with a net loss of $1,879,434 on net revenues of $2,752,470 in the
corresponding period in 2007.
HEALTHMARKETS INC: S&P Cuts Counterparty Credit Rating to 'BB-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
rating on HealthMarkets Inc. by one notch to 'BB-' from 'BB'. At
the same time, Standard & Poor's lowered its various counterparty
credit and financial strength ratings on HealthMarkets'
subsidiaries by one notch. The outlook on all of these companies
remains negative.
"The downgrade reflects our opinion that the company's operating
performance in its core Self-Employed Agency Division is
substantially weaker than we had expected and that this weaker
performance likely will persist in the near to intermediate term,"
said Standard & Poor's credit analyst Neal Freedman.
SEA's operating earnings of $30.7 million through the first six
months of 2008 were well below even S&P's revised expectations.
S&P believes the conditions that led to this performance will
continue. Furthermore, S&P now expects fixed-charge coverage to
be 2x-3x in 2008, which is more consistent with the new ratings
and likely will improve slightly in the second half of 2009.
HEXION SPECIALTY: Files Suit v Banks Over Merger Funding Breach
---------------------------------------------------------------
Hexion Specialty Chemicals, Inc., disclosed in a Securities and
Exchange Commission filing that it has commenced an action in the
Supreme Court of the State of New York against affiliates of
Credit Suisse and Deutsche Bank (New York County Index No.
114552/08).
Hexion alleges in the suit that the banks breached their
obligations under the financing commitment letter to fund the
closing of the Hexion-Huntsman merger, and seeks specific
performance of the banks' obligations on an expedited basis.
Hexion had received correspondence from counsel to affiliates of
Credit Suisse and Deutsche Bank stating that the banks do not
believe that the solvency opinion of American Appraisal Associates
and the solvency certificate of Huntsman Corporation's (NYSE:HUN)
Chief Financial Officer meet the condition of the commitment
letter, and stated that as a result the banks do not plan to fund
the proposed closing of the merger.
Hexion strongly disagreed with the banks' position and has advised
them of their obligation to fulfill the financing commitment for
the merger. Hexion said that while it intends to meet and work
with the banks today to try to complete the merger, if the banks
do not fund their commitment, Hexion will vigorously enforce all
of its contractual rights
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at June 30, 2008,
showed total assets of $3.9 billion and total liabilities of
$5.4 billion, resulting in a shareholders' deficit of
$1.5 billion.
HIGHLAND LEGACY: Moody's Cuts $30MM Notes Ratings to B3 from Ba3
----------------------------------------------------------------
Moody's Investors Service has downgraded the notes issued by
Highland Legacy Limited:
Class Description: $10,000,000 Class D Fixed Rate Notes, Due 2011
-- Prior Rating: Ba3
-- Prior Rating Date: 8/18/1999
-- Current Rating: B3
Class Description: $20,000,000 Class D Floating Rate Notes, Due
2011
-- Prior Rating: Ba3
-- Prior Rating Date: 8/18/1999
-- Current Rating: B3
According to Moody's, the rating actions are a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of senior secured
loans. Moody's noted that the transaction has a significant
exposure to real estate and retail sectors which have experienced
increased number of defaults in the current credit environment.
In addition, Moody's has upgraded the notes as a result of the
ongoing delevering of the transaction:
Class Description: $20,000,000 Class B Fixed Rate Notes, Due 2011
-- Prior Rating: A3
-- Prior Rating Date: 8/18/1999
-- Current Rating: Aaa
Class Description: $55,000,000 Class B Floating Rate Notes, Due
2011
-- Prior Rating: A3
-- Prior Rating Date: 8/18/1999
-- Current Rating: Aaa
HOME EQUITY: Moody's Junks Ratings on Two Classes of Certificate
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 8 tranches
from Home Equity Loan Asset-Backed Certificates, Series 2007-FRE1.
These actions are as a result of Moody's September 18, 2008
announcement that it had updated its loss projections on first-
lien subprime RMBS.
Complete rating actions are:
Issuer: Home Equity Loan Asset-Backed Certificates, Series 2007-
FRE1
-- Cl. 2-AV-3, Downgraded to Aa2 from Aaa
-- Cl. 2-AV-4, Downgraded to A1 from Aaa
-- Cl. M-1, Downgraded to Baa2 from A1
-- Cl. M-2, Downgraded to Ba1 from Baa2
-- Cl. M-3, Downgraded to B1 from Ba2
-- Cl. M-4, Downgraded to B3 from B1
-- Cl. M-5, Downgraded to Caa2 from B2
-- Cl. M-6, Downgraded to C from B3
INDYMAC RESIDENTIAL: Moody's Reviews 14 Ratings for Likely Cut
--------------------------------------------------------------
Moody's Investors Service has placed on review the ratings of
fourteen tranches issued in eight IndyMac Residential Mortgage-
Backed Trust transactions. Underlying collateral consists
primarily of first lien adjustable-rate residential lot loans.
Indy Mac's residential "lot loan" program was intended for
borrowers seeking short term financing to purchase land, with the
ultimate purpose of building a home on the land. Most loans have
either a two-year or five-year maturity with a single "balloon
payment" at the maturity date.
The actions are part of Moody's ongoing review process, and
reflect the deteriorating housing market and rising delinquencies
and foreclosures. The rating adjustments will vary based on the
levels of protection afforded by structural subordination,
collateral characteristics, pool-specific historical performance
and other qualitative factors.
Complete rating actions are:
Issuer: IndyMac Residential Mortgage-Backed Trust 2005-L1
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba2
Issuer: IndyMac Residential Mortgage-Backed Trust 2005-L2
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa3
Issuer: IndyMac Residential Mortgage-Backed Trust 2005-L3
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba2
Issuer: IndyMac Residential Mortgage-Backed Trust 2006-L1
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba2
Issuer: IndyMac Residential Mortgage-Backed Trust 2006-L2
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba2
Issuer: IndyMac Residential Mortgage-Backed Trust 2006-L3
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba2
Issuer: IndyMac Residential Mortgage-Backed Trust 2006-L4
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba2
Issuer: IndyMac Residential Mortgage-Backed Trust 2007-L1
-- Cl. M, Placed on Review for Possible Downgrade, currently
Baa2
-- Cl. B, Placed on Review for Possible Downgrade, currently Ba1
INPHONIC INC: Court Confirms 2nd Amended Joint Plan of Liquidation
------------------------------------------------------------------
Following an Oct. 14, 2008 hearing, the U.S. Bankruptcy Court for
the District of Delaware confirmed the second amended joint plan
of liquidation of SN Liquidation Inc., et al., proposed by the
Debtors and the Official Committee of Unsecured Creditors dated
Aug. 11, 2008.
The Plan
As reported in the Troubled Company Reporter on Sept. 23, 2008,
the Plan contemplates the liquidation of the Debtors' assets and
the resolution of the outstanding claims against and interests in
the Debtors. Prior to the Nov. 8, 2007 bankruptcy filing, the
Debtors reached an agreement, subject to higher and better offers,
to sell substantially all of their assets to Adeptio INPC Funding,
LLC, the parent corporation of Simplexity Inc. The Committee
objected to the sale. The Committee, the Debtors, and Adeptio
reached a compromise whereby Adeptio agreed to make certain
payments in connection with the Debtors' bankruptcy cases and
pursuant to a plan of reorganization. After a hearing on
Dec. 13, 2007, the Court entered an order approving the sale.
Pursuant to the Sale Order, the Debtors sold substantially all of
their assets to Adeptio INPC Funding, LLC, which sale closed on
Dec. 21, 2007. On or around Dec. 21, 2007, Adeptio assigned to
Simplexity its rights to receive the Assets under the APA.
The Plan provides for the distribution of the bankruptcy estates'
interest in proceeds from the sale and the creation of a
litigation trust that will administer the remaining property of
the Debtors, which includes causes of action. Under the Plan,
each holder of an Allowed General Unsecured Claim -- including
rebate claims -- will receive its pro rata share of all Cash, if
any, available for distribution by the Litigation Trust up to the
full amount of the Allowed General Unsecured Claim, after
satisfaction in full of all expenses, unpaid Allowed Secured
Claims, including the Adeptio Loan, Allowed Administrative Claims,
Allowed Priority Tax Claims, and Allowed Priority Non-Tax Claims.
Allowed General Unsecured Claims are estimated to total
$350 million.
All Cash necessary for the Debtors or the Litigation Trustee to
make payments will be obtained from these sources:
(a) the Debtors' or SN Liquidation's Cash on hand (which is
little or none);
(b) Cash received upon liquidation of the Debtors' assets
excluded from the sale, including proceeds of all the
Debtors' Causes of Action against directors and officers or
otherwise;
(c) Adeptio's funding obligations pursuant to the sale.
The Term Sheet provides that Adeptio will provide a $500,000
secured loan to fund the investigation of Causes of Action and to
commence and prosecute litigation if appropriate through the
Litigation Trust. The value of the Debtors' Causes of Action is
uncertain, and the Litigation Trust needs to further investigate
those claims.
William Rochelle of Bloomberg News said that secured creditor
Versa Capital Management, an affiliate of Adeptio, was to provide
as much as $500,000 for payment of priority claims and
$1.1 million for professional fees, while putting $200,000 into a
litigation trust and giving the trust a $500,000 loan.
Intercompany Claims and Equity Interests are being extinguished
and will not receive any distribution.
About InPhonic Inc.
Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)--
http://www.inphonic.com/-- provides internet and wireless
services. The company through its wholly owned subsidiary, CAIS
Acquisition II, market broadband and VOIP services. The company
maintained operations centers in Largo, Maryland; Reston,
Virginia; and Great Falls, Virginia.
As reported in Troubled Company Reporter on Feb. 12, 2008, the
Court authorized the Debtors to change their name and the caption
of the bankruptcy case to SN Liquidation, Inc.
The company and its debtor-affiliates filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to
07-11673). Thomas R. Califano, Esq., and Jeremy R. Johnson, Esq.,
at DLA Piper, LLC in New York, and Neil Glassman, Esq., Eric M.
Sutty, Esq., and Mary E. Augustine, Esq., at Bayard Firm P.A.,
Wilmington, Delaware, represent the Debtors. The Debtors selected
BMC Group Inc. as their claims, noticing and balloting agent. The
United States Trustee for Region 3 appointed five creditors to
serve on an Official Committee of Unsecured Creditors in the
Debtors' cases. Kurt F. Gwynne, Esq., and Robert P. Simons, Esq.,
at Reed Smith LLP, represent the Committee. Anup Sathy, P.C.,
Esq., and David A. Agay, Esq., at Kirkland & Ellis in Chicago,
Illinois, represent Adeptio and Simplexity, the buyer of the
Debtors' assets.
When the Debtors filed from protection from their creditors,
they listed total assets of $120,916,991 and total debts of
$179,402,834.
INVISTA BV: Moody's Affirms Corporate Family Rating at 'Ba2'
------------------------------------------------------------
Moody's Investors Service affirmed INVISTA B.V.'s Corporate Family
Rating of Ba2 and its other ratings. Moody's also lowered IBV's
speculative grade liquidity rating to SGL-3 from SGL-2 reflecting
weakening operational cash flow due to softer market conditions
and the one time effects of hurricane Ike. A further concern is
the prospect, absent debt reduction via equity infusions from
IBV's parent or a restructuring, of weak headroom under its
existing bank covenants. IBV is an independently managed wholly
owned indirect subsidiary of Koch Industries, Inc.
The rating outlook is stable and assumes that IBV's parent will
continue to provide equity infusions on a timely basis as many of
IBV's end markets are likely to weaken further over the next year.
IBV's SGL-3 speculative grade liquidity rating reflects adequate
operational liquidity enhanced by recent cash infusions from IBV's
parent. The SGL-3 rating reflects strong cash balances of
$349 million at the end of June 2008, good availability under its
$400 million revolver, further liquidity provided by two accounts
receivable facilities and a favorable debt maturity profile
tempered by the expectation of limited headroom under its existing
bank covenants in 2009 even with the recent equity infusions.
In the 3rd quarter, IBV received (i) a significant payment
pursuant to the Tax Sharing Agreement with its parent, dated April
30, 2004 of $210 million and (ii) a $300 million equity
contribution from its parent. This cash along with existing cash
was used in part to repay borrowings under IBV's senior credit
facility. As a result of these actions Moody's believes that IBV
will be in compliance with its debt covenants at the end of the
third quarter of 2008 and IBV will have no significant drawings on
its revolver at the end of the quarter.
The SGL-3 is also supported by Moody's belief that IBV is having
further conversations with its parent about making additional
equity contributions to be used for permanent de-leveraging;
Moody's will monitor the progress of these conversations. The
timeliness of these contributions is an important factor in the
ratings affirmations and stable outlook as well as the decision to
assign the SGL-3 rating.
In addition, the amount and timing of the potential equity
contributions will be dependent upon, among other things,
conversations with IBV's lenders regarding appropriate amendments
or restructuring of its current credit facilities, or replacement
of the existing credit facility in favor of a new credit facility
with limited financial covenants.
With the recent equity contribution and the prospect of additional
contributions, Moody's expects IBV to continue to have an adequate
amount of financial flexibility derived from cash on the balance
sheet at the end of September 2008 and adequate available lines of
credit, consisting of a $400 million revolver and accounts
receivable programs. Moody's believes, given the difficult
industry conditions, the company may draw under its revolver over
the next twelve months. Moody's anticipates that IBV will be
challenged to maintain compliance with existing covenants in 2009
without additional equity contributions or restructurings that are
currently being discussed. Moody's will monitor management's
efforts to adjust these covenants to provide more flexibility.
Currently under its credit agreement, IBV is required to comply
with a 4.0 times leverage ratio and a 3.0 times interest coverage
ratio.
Moody's last rating action was upgrading the corporate family
rating to Ba2 in May of 2006 and the upgrade reflected Moody's
belief that the successful integration and cost saving initiatives
completed by management, post IBV's acquisition, in April 2004, of
DuPont Textiles & Interiors' assets, resulted in a sustained
improvement in retained cash flow. This improvement in cash flow
when combined with modest debt reduction resulted in credit
metrics that support the higher rating. IBV's revenues were
$9.1 billion in for the last 12 months ending June 30, 2008.
ISCO INTERNATIONAL: Cuts Jobs at Clarity Communications Unit
------------------------------------------------------------
ISCO International, Inc., disclosed in a Securities and Exchange
Commission filing that on Oct. 27, 2008, its management took
action to reduce the monthly cash expenditure associated with
Clarity Communication Systems Inc., its software business unit, by
reducing headcount under a plan of termination.
The headcount reductions are effective immediately and will result
in a charge for one time termination benefits of approximately
$75,000. As strategic options continue to be evaluated, a
retention program has been provided for the remaining employees.
The costs associated with this retention program are estimated at
$100,000.
In addition, approximately 1.1 million shares of the company's
stock will vest immediately. These shares were granted in January
2008 as part of the acquisition of Clarity. The vesting is
accelerated due to the headcount reductions. The vesting of these
shares will result in a non-cash charge of approximately $ 75,000.
Management's decision was driven by the amount of capital required
to achieve cash flow breakeven operations at Clarity, the
inability to obtain new operating capital in the current financial
market environment and the lack of sufficient capital available to
operate both the company's hardware and software segments
adequately. The company remains fully committed to the hardware
business and believes that the full or partial exit from the
software business will allow management to focus its efforts and
resources on the success of the hardware business.
At this time, the company is unable to estimate the amount or
range of amounts of the charges it may incur in connection with a
strategic transaction or shutdown of operations and liquidation of
Clarity.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 18, 2008,
Grant Thornton LLP, in Chicago, expressed substantial doubt about
ISCO International Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006.
The auditing firm reported that the company incurred a net loss of
approximately $6.4 million during the year ended Dec. 31, 2007,
and, as of that date, the company's accumulated deficit was
approximately $171.0 million. The auditing firm also said that
the company has consistently used, rather than provided, cash in
its operations.
ISCO International Inc. reported a consolidated net loss of
$2.3 million for the second quarter ended June 30, 2008, versus a
consolidated net loss of $832,039 during the same period of 2007.
ISCO reported consolidated net revenues of $2.5 million for the
quarter ended June 30, 2008, versus $3.4 million during the
comparable period of 2007. All 2008 figures include the addition
of Clarity Communication Systems Inc., which was acquired by ISCO
on Jan. 3, 2008.
At June 30, 2008, the company's consolidated balance sheet showed
$28.2 million in total assets, $21.7 million in total liabilities,
and $6.5 million in shareholders' equity.
About ISCO International
Headquartered in Elk Grove Village, Ill., ISCO International Inc.
(AMEX: ISO) -- http://www.iscointl.com/-- is a supplier of RF
management and interference-control solutions for the wireless
telecommunications industry.
JBS USA: Moody's Withdraws 'Ba3' Rating on Term Loan Suspension
---------------------------------------------------------------
Moody's Investors Service withdrew the rating of a proposed
$500 million 6 year senior secured guaranteed term loan of JBS
USA, Inc. (previously Swift & Company). This withdrawal action
follows the company's decision to suspend active syndication of
the term loan. The U.S. Department of Justice has filed a lawsuit
to block parent JBS S.A. from acquiring National Beef Packing
Company LLC; JBS S.A. has announced its intention to defend itself
in this lawsuit.
The term loan, partial funding for the National Beef transaction,
will not be needed unless and until the National Beef acquisition
receives regulatory approval. Moody's previous rating action was
the assignment of this rating, simultaneously placing it under
review for possible downgrade, on September 17, 2008.
Rating withdrawn:
-- $500 million senior secured 6 year term loan, guaranteed by
JBS S.A., at Ba3
JBS USA, Inc. is one of the world's leading beef and pork
processing companies. Its largest business segments are domestic
beef processing (62.9% of gross sales for the twenty-six weeks
ended June 29, 2008), domestic pork processing (20.1%) and beef
operations in Australia (17%). Sales from July 10, 2007, when JBS
USA, Inc. was purchased by JBS S.A., to June 29, 2008 were
approximately $10.6 billion.
JONES APPAREL: Weak Operating Results Cue S&P to Cut Rtngs to BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Service lowered its corporate credit and
senior unsecured debt ratings on apparel marketer Jones Apparel
Group Inc. to 'BB-' from 'BB'. The recovery rating on these notes
remains '4', indicating the expectation for average recovery in
the event of a payment default. The outlook is negative. As of
Oct. 4, 2008, Bristol, Pennsylvania-based Jones had $779.4 million
of total debt.
The ratings downgrade follows the company's earnings report for
the quarter-ended Oct. 4, 2008, which reflects weaker-than-
expected operating results and credit measures. As a result of
the difficult retail environment, Jones saw sales and margin
declines in all business segments during the quarter.
The ratings on the apparel marketer and manufacturer reflect the
company's weakening operating trends and credit measures. The
ratings also reflect the highly competitive nature of the apparel
and footwear businesses, and the company's concentration in the
department store channel.
The outlook is negative. S&P expects that Jones will face
challenges to improve its operating performance in the near term,
in light of the much weaker retail environment and economic
conditions. "We could lower the ratings if Jones cannot improve
its performance and credit measures, or if leverage increases
further and/or remains above 5x," said Standard & Poor's credit
analyst Susan H. Ding. S&P estimates that if 2008 full-year sales
decline by 7% and the EBITDA margin declines by about 150 basis
points, leverage would remain above 5x in 2008, and a further
sales decline of about 6% in 2009 with flat margins would result
in leverage in the 5.1x - 5.5x range.
"If the company can improve and sustain its operating margins and
credit protection measures, and reduce and sustain leverage below
5x, we could revise the outlook to stable," she continued.
JP MORGAN: Moody's Cuts $34MM Class H Certificates Rating to 'Ba1'
------------------------------------------------------------------
Moody's Investors Service downgraded the rating of one class and
confirmed two classes of J.P. Morgan Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates, Series 2005-CIBC13
as:
-- Class F, $37,407,000, confirmed at Baa1
-- Class G, $30,607,000, confirmed at Baa2
-- Class H, $34,007,000, downgraded to Ba1 from Baa3
Moody's had placed Classes F, G and H on review for possible
downgrade on August 7, 2008 due to potential declines in credit
enhancement levels due to estimated losses from specially serviced
loans. Moody's is confirming Classes F and G due to sufficient
levels of credit enhancement at these classes. Moody's is
downgrading Class H due to the expected impact of losses from the
specially serviced loans.
As of the October 14, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 3.0%
to $2.64 billion from $2.72 billion at securitization. The
Certificates are collateralized by 229 mortgage loans ranging in
size from less than 1% to 7% of the pool, with the top 10 loans
representing 33% of the pool.
One loan has been liquidated from the pool, resulting in a
$323,000 realized loss There are six loans currently in special
servicing, representing 1.9% of the pool. Three of these loans,
representing 1.3% of the pool, are real estate owned loans secured
by student housing properties located in Tallahassee, Florida.
The sponsor for these loans was Hurley Booth, a major
owner/manager of student housing properties in Tallahassee. These
loans have all been in special servicing since 2007 and became REO
in 2008. The remaining three loans in special servicing are
secured by retail properties located in Texas (2) and Minnesota
(1). One of these loans, representing 0.2% of the pool, is also
REO. The servicer has recognized an aggregate appraisal reduction
of $17.0 for the specially serviced loans. Moody's is estimating
an aggregate loss of $18.3 million.
Moody's periodically completes full reviews in addition to
monitoring transactions on a monthly basis. Moody's prior full
review is summarized in a Press Release dated August 7, 2008.
Moody's has published rating methodologies outlining its
analytical approach to surveillance and its approach to rating
conduit and fusion transactions. In addition, Moody's has
published numerous articles outlining its ratings approach to the
various property types customarily deposited within these
transactions along with other articles on credit issues unique to
CMBS. The major rating methodologies employed in analyzing this
transaction include:
CMBS: Moody's Approach to Surveillance, September 30, 2002 -- this
paper provides an overview of Moody's surveillance philosophy, an
indication of what prompts a conduit review, how conduit and large
loan monitoring is performed, and what its objectives are with
respect to post-closing requests and servicer reviews; and
CMBS: Moody's Approach to Rating U.S. Conduit Transactions,
September 15, 2000 -- this paper provides an overview of rating
methodology and process with details on property level analysis,
loan level analysis, legal and structural characteristics, and
portfolio characteristics with supplementary information on legal
issues, a research summary, helpful information for commercial
real estate transactions, capitalization rates, and guidelines for
capital reserves.
JP MORGAN: Moody's Holds Low-B Ratings on Six Certificate Classes
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of three classes
and affirmed 16 classes of J.P. Morgan Chase Commercial Mortgage
Securities Corp., Commercial Mortgage Pass-Through Certificates,
Series 2004-C1 as:
-- Class A-1, $27,474,534, affirmed at Aaa
-- Class A-2, $210,000,000, affirmed at Aaa
-- Class A-3, $303,158,000, affirmed at Aaa
-- Class A-1A, $216,010,760, affirmed at Aaa
-- Class X-1, Notional, affirmed at Aaa
-- Class X-2, Notional, affirmed at Aaa
-- Class B, $27,355,000, upgraded to Aaa from Aa1
-- Class C, $11,724,000, upgraded to Aaa from Aa2
-- Class D, $22,145,000, upgraded to A1 from A2
-- Class E, $13,026,000, affirmed at A3
-- Class F, $11,723,000, affirmed at Baa1
-- Class G, $9,119,000, affirmed at Baa2
-- Class H, $10,421,000, affirmed at Baa3
-- Class J, $6,513,000, affirmed at Ba1
-- Class K, $5,210,000, affirmed at Ba2
-- Class L, $3,908,000, affirmed at Ba3
-- Class M, $5,211,000, affirmed at B1
-- Class N, $2,605,000, affirmed at B2
-- Class P, $2,605,000, affirmed at B3
Moody's upgraded Classes B, C and D due to overall improved pool
performance, increased credit enhancement levels and increased
defeasance.
As of the October 15, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 14%
to $899 million from $1 billion at securitization. The
Certificates are collateralized by 114 mortgage loans ranging in
size from less than 1% to 17% of the pool with the top 10 conduit
loans representing 30% of the pool. The largest loan in the pool,
which represents 17% of the pool, has an investment grade
underlying rating. Seventeen loans, representing 16% of the pool,
have defeased and are collateralized by U.S. Government
securities.
One loan has been liquidated from the pool, resulting in a $4.6
million realized loss. There are no loans currently in special
servicing. Fifteen loans, representing 9% of the pool, are on the
master servicer's watchlist. The watchlist includes loans which
meet certain portfolio review guidelines established as part of
the Commercial Mortgage Securities Association's monthly reporting
package. As part of its ongoing monitoring of a transaction,
Moody's reviews the watchlist to assess which loans have material
issues that could impact performance.
Moody's was provided with full-year 2007 operating results for
approximately 85% of the pool. Moody's loan to value ratio for
the conduit component is 86% compared to 88% at Moody's prior full
review in December 2008 and 90% at securitization.
The loan with the underlying rating is the Forum Shops Loan
($148.3 million -- 16.5%), which is a 33.3% pari passu interest in
a $444.8 million first mortgage loan. The loan is secured by a
645,000 square foot retail center located at Caesar's Palace in
Las Vegas, Nevada. The center was 100% occupied as of December
2007, the same as at last review. Average sales for tenants
leasing less than 10,000 square feet were $1,571 per square foot
for the trailing 12-month period ending April 2008. The loan
sponsor is the Simon Property Group, Inc. The property is also
encumbered by an $81.3 million B Note which is held outside the
trust. Moody's current underlying rating is Aaa compared to Aa1
at last review.
The top three conduit loans represent 21.0% of the pool. The
largest conduit loan concentration is the Hometown America
Portfolio IV & V Loans ($92.4 million -- 10.3%), which is secured
by 14 manufactured home communities totaling 3,742 units and
located in eight states. The portfolio was 89% occupied as of
March 2008 compared to 95% at last review. Moody's LTV is 80%
compared to 87% at last review.
The second largest conduit loan is the One Fordham Plaza Loan
($53.2 million -- 5.9%), which is secured by a 414,000 square foot
office building located in the Bronx, New York. The property was
89% leased as of December 2007 compared to 93% at last review.
The largest tenant is Montefiore Hospital which leases 33% of the
premises under leases expiring in October 2009 (7%), May 2012
(15%) and May 2013 (11%). Montefiore can extend the leases which
expire in 2012 and 2013 to September 2036 at a net rent of
$1.00 per square foot. Other tenants include the New York City
Housing Authority (14% of NRA; lease expiration January 2010) and
the New York State Division of Human Resources (11%; lease
expiration July 2010). Moody's LTV is 75% compared to 76% at last
review.
The third largest conduit loan is the White Oak Crossing Shopping
Center Loan ($43.2 million - 4.8%) which is secured by a 517,000
square foot shopping center located approximately seven miles
southeast of Raleigh, North Carolina. The center is anchored by
BJ's Wholesale Club, Kohl's, Dick's Sporting Goods, Best Buy, Ross
Stores, T.J.Maxx, Linens 'n Things, HomeGoods, Michaels and
Petsmart. The center is shadow anchored by Target. The center
was 100% occupied as of January 2008, the same as at last review.
However, Linens n'Things, which occupies 5% of the GLA, is in
bankruptcy and has announced plans to close all its stores.
Moody's LTV is 84% compared to 80% at last review.
Moody's periodically completes full reviews in addition to
monitoring transactions on a monthly basis. Moody's prior full
review is summarized in a press release dated December 8, 2006.
Moody's has published rating methodologies outlining its
analytical approach to surveillance and its approach to rating
conduit and fusion transactions. In addition, Moody's has
published numerous articles outlining its ratings approach to the
various property types customarily deposited within these
transactions along with other articles on credit issues unique to
CMBS. The major rating methodologies employed in analyzing this
transaction include:
CMBS: Moody's Approach to Surveillance, September 30, 2002 -- this
paper provides an overview of Moody's surveillance philosophy, an
indication of what prompts a conduit review, how conduit and large
loan monitoring is performed, and what its objectives are with
respect to post-closing requests and servicer reviews;
CMBS: Moody's Approach to Rating U.S. Conduit Transactions,
September 15, 2000 -- this paper provides an overview of rating
methodology and process with details on property level analysis,
loan level analysis, legal and structural characteristics, and
portfolio characteristics with supplementary information on legal
issues, a research summary, helpful information for commercial
real estate transactions, capitalization rates, and guidelines for
capital reserves; and
US CMBS: Moody's Approach to Rating Fusion Transactions, April 19,
2005 -- this paper discusses the key ratings factors for fusion
deals, value drivers for office and retail properties, valuation
and cap rate issues, property type volatility, Moody's large loan
tranching methodology, and an assessment of subordination levels.
KIRK PIGFORD: Ct. Okays Private Sale of Avalon West for $411,825
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina approved Kirk Pigford Construction Inc.'s emergency
motion for the private sale of its property located at 1829 Caribe
Court, more particularly described as all of Lot 18, Avalon West
Subdivision, in Wilmington, North Carolina, free and clear of
liens and other interests, to David and Linda Elmore for $411,825.
The Debtor presented evidence that it will suffer irreparable harm
if the sale is not approved, including loss of the sale and lost
revenue. The Debtor has not received any other offers for this
property.
NewBridge Bank, Ed Newsome Hardwood Floors Inc., Kitchen and
Lighting Designs Inc., Coastal Sash & Door Inc., Coastal Glass &
Hardware, Probuild East LLC fka. The Contractor Yard, LLC, General
Shale Brick Inc., Blown Rite Insulations Inc. have asserted liens
in the above property and proceeds therefrom.
The Court ordered that the liens on the property shall attach to
the proceeds of sale, if any, subject to the Orders of
Distribution or Orders of Cash Collateral that may be entered by
the Court.
About Kirk Pigford
Based in Wrightsville Beach, N.C., Kirk Pigford Construction Inc.
-- http://www.kirkpigfordconstruction.com/-- is a homebuilder.
The company filed for Chapter 11 relief on Oct. 14, 2008 (Bankr.
E.D. N.C. Case No. 08-07139). Trawick H. Stubbs, Jr., Esq., at
Stubbs & Perdue, P.A. represents the Debtor as counsel. When the
Debtor filed for protection from its creditors, it listed assets
of $10 million to $50 million, and debts of $10 million to
$50 million.
LAND RESOURCE: Blames Liquidity Crisis for Chapter 11 Bankruptcy
----------------------------------------------------------------
Land Resource LLC along with its 33 affiliates filed voluntary
petitions under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the Middle District of
Florida.
The company said that its liquidity was beginning to wane in
2006. Accordingly, the company began to slow its infrastructure
development expenditures to conserve liquidity to withstand a
prolonged downturn. The company, however, continued costly
marketing efforts, which was implemented in mid 2006, due to pre-
existing development obligations. In 2007, the company generated
contracts for sale of approximately $189 million, but lack of
consumer confidence levels and the tightening credit market
resulted in the closing $87 million in sales for the period ended
Dec. 31, 2007.
Furthermore, the company implemented significant staff reductions
this year. The company laid off 90% of its workforce in June
2008, which reduced its wide annualized salary expenses to
$1.1 million from $8.3 million. In early July, the company ceased
substantially all sale operations and closed their sales offices
at Wild Ridges, Villages at Norris Lake, Roaring River, Grey Rock,
Laird Point, and Bridge Pointe.
Despite reduction in workforce and expenditures, the company
did not have sufficient liquidity to address their current
liabilities, and was unable to complete development of their
communities resulted in the closing of most of their outstanding
contracts.
The company listed assets between $100 million and $500 million,
and debts between $50 million to $100 million. The company owes
about $6,869,149 to its unsecured creditors including (i) A B
Sitework Inc. owing $1,127,724; (ii) York Bridge Concepts Inc.
owing $602,750; Keystone Maintenance Inc. owing $452,843; and (iv)
Revolve Media Inc. owing $425,929.
A syndicate of financial institutions led by KeyBank National
Association agreed to provide as much as $2,138,000 in
postpetition financing for operation of the company's business and
the orderly sale and disposition of its real estate development
projects. The facility will incur interest at 200 basis points in
excess of the Base Rate per annum. The facility is expected to
mature on the earliest to occur, among other things, (i) January
31, 2009; and (ii) the plan and sale's effective date.
To the secure the company's DIP obligations, the lender will be
granted superpriority claims status senior to any superpriority
claim under Section 364(c)(1) of the United States Bankruptcy
Code.
Wachovia Bank, National Association is KeyBank's co-lender.
According to the company's Web site, in the midst of declining
real estate sales and a credit market that continues to
deteriorate, upscale residential community developer Land Resource
is in discussions with the company's senior lenders regarding
ongoing liquidity needs and restructuring of its existing
indebtedness.
J. Robert Ward, chairman and chief executive officer, said that
company officials are working non-stop with lenders to restructure
the company's debt and bring the capital structure in line with
today's market place realities.
"In our most recent discussions, our lenders have expressed a
strong interest in continuing to identify creative solutions to
our finance challenges under unprecedented real estate market
conditions," Mr. Ward stated. "While no definitive commitments
have been made at this time, we remain very optimistic about the
alternatives under discussion.
"Land Resource remains focused on preserving the value of its
enterprise for the benefit of all company stakeholders, including
vendors, suppliers and most importantly property owners and
customers. We will remain steadfast in the pursuit of the
financing we need," Mr. Ward added.
According to papers filed with the Court, Mr. Ward owns 79.9% of
the company's membership interests, Mallory Elizabeth Ward
Irrevocable Trust and The Sarah Caitlin Ward Irrevocable Trust
own 10% each, and Land Resource Group Inc. owns 0.1%.
Jordi Guso, Esq., at Berger Singerman P.A., represents the
company.
The company selected Trustee Services Inc. as notice, claims and
balloting agent, and Gulf Atlantic Capital Corporation as
financial advisors and investment banker.
The company's Chapter 11 case is assigned to the Hon. Arthur B.
Briskman.
A full-text copy of the company's motion to obtain financing is
available for free at http://ResearchArchives.com/t/s?3462
A full-text copy of the company's debtor-in-possession budget is
available for free at http://ResearchArchives.com/t/s?3461
About Land Resource
Headquartered in Orlando, Florida, Land Resource LLC --
http://www.landresource.com-- creates residential communities,
which includes coastal, lakefront and mountain locations in
Georgia, North Carolina, West Virginia, Tennessee and Florida
LAND RESOURCE: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Land Resource, LLC
5323 Millenia Lakes Boulevard, Suite 300
Orlando, FL 32839
Bankruptcy Case No.: 08-10159
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Land Resource, LLC 08-10159
Land Resource Group, Inc. 08-10160
Laird Point Brokerage, LLC 08-10161
LR Buffalo Creek, LLC 08-10162
LR Riversea, LLC 08-10163
Blue Mist Farms, LLC 08-10164
Laird Point, LLC 08-10165
LRC Holdings, LLC 08-10166
Bridge Pointe at Jekyll Sound, LLC 08-10167
Lakemont Advertising, LLC 08-10168
LRC Realty, LLC 08-10169
Clarks Hill Lake, LLC 08-10170
Land Resource Group of North Carolina, LLC 08-10171
Coastline Properties, LLC 08-10172
Point Peter, LLLP 08-10173
Land Resource Meigs County, LLC 08-10174
Roaring River Holding Company, Inc. 08-10175
Cumberland Harbour Realty, LLC 08-10176
Land Resource Orchards, LLC 08-10177
Hickory Bluff Marina Club, Inc. 08-10178
Roaring River, LLC 08-10179
Land Resource Satilla River, LLC 08-10180
Hickory Bluff Marina, LLC 08-10181
Rush Creek Land Company, Inc. 08-10182
Laird Bayou Brokerage, LLC 08-10183
Land Resource Watts Bar, LLC 08-10184
Southern HOA Management, LLC 08-10185
Laird Bayou, LLC 08-10186
Stillwater Coves, LLC 08-10187
LandFirst Mortgage, LLC 08-10188
LR Baytree Landing, LLC 08-10189
The Ridges at Morgan Creek, LLC 08-10190
Title, LLC 08-10191
Villages at Norris Lake, LLC 08-10192
Type of Business: The Debtors -- http://www.landresource.com--
build residential communities, which includes
coastal, lakefront and mountain locations in
Georgia, North Carolina, West Virginia,
Tennessee and Florida.
Chapter 11 Petition Date: October 30, 2008
Court: Middle District of Florida (Orlando)
Judge: Arthur B. Briskman
Debtor's Counsel: Jordi Guso, Esq.
jguso@bergersingerman.com
Berger Singerman, P.A.
200 South Biscayne Blvd, Suite 1000
Miami, FL 33131-5308
Tel: (305) 755-9500
Notice, Claims and Balloting Agent: Trustee Services Inc.
Financial Advisors and Investment Banker: Gulf Atlantic Capital
Corporation
Estimated Assets: $100 million to $500 million
Estimated Debts: $50 million to $100 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
A B Sitework Inc. $1,127,724
195 Round Bar Drive
Hampton Cove, AL 35763
York Bridge Concepts Inc. $602,750
1419 W. Waters Avenue, Suite 116
Tampa, FL 33604
Keystone Maintenance Inc. $451,843
1300 Turner Road
Lilburn, GA 30047
Revolve Media Inc. $425,929
650 Technology Par
Lake Mary, FL 32746
Prudential Relocation Inc. $423,241
P.O. Box 841337
Dallas, TX 75284
Taylor & Murphy Construction $390,017
P.O Box 1243
Charlotte, NC
Scheer's Incorporated $882,559
601 Oakmont Lane, Suite 400
Westmonte, IL 60559-5570
Northwest Cascade Inc. $374,884
P.O. Box 73399
Puyallup, WA 98373
The Rowboat Company Inc. $346,492
P.O. Box 3423
Mooresville, NC 28117
Progressive Communications $308,180
1001 Sand Pond Road
Lake Mary, FL 32746
City of St. Mary's $269,337
418 Osborne Street
St. Mary's, GA 31558
SGC Inc. $235,000
R&R Excavaring Company $219,698
Netjets Aviation Inc. $130,929
Snelling Walters Insurance $104,732
Smith Moore, LLP $98,544
Beachview Tent Rentals $92,936
Morrow & Son LLC $88,120
Tuttle Masonry Inc. $85,896
Howard B. Jones & Son. Inc. $81,357
Sea Ray of Knoxville $78,000
Brockingtom and Associates Inc. $75,676
Erosion Solutions LLC $68,468
Sailors Engineering Associates $66,580
Keller Williams Realty, ATL $65,312
Dillard Smith Construction $56,305
Hickory Nut Development Corp. $55,989
CIT-EF Loaniq Aerospace $54,958
Azimuth Control Inc. $54,107
LCE Engineers Inc. $53,586
LEHMAN BROTHERS: DTCC Closes Out Over $500 Billion in Debt
----------------------------------------------------------
The Depository Trust & Clearing Corporation, a post-trade
clearance and settlement infrastructure for the U.S. capital
markets, disclosed that it has closed out over $500 billion in
market participants' exposure from the Lehman Brothers, Inc.
bankruptcy which occurred the week of Sept. 22. DTCC related that
this was the largest close-out in DTCC's history.
DTCC reports it does not expect there to be any impact to its
retained earnings or to market participants' clearing fund
deposits as a result of closing out these pending trade
obligations.
"The liquidation of Lehman was complex, involved multiple asset
classes, and required a methodical approach to mitigate potential
losses from outstanding trading obligations," Donald F. Donahue,
DTCC chairman and CEO, said. "Without question, our ability to
manage risk and see exposure from a central vantage point was
instrumental in helping us ensure that market risk -- and
systemic risk -- was avoided. During the crisis, DTCC also
seamlessly processed four consecutive days of record high equity
trading volume, which reached 209 million transactions in a single
day on Oct. 10, thus providing certainty and stability for the
financial system at a time of extreme market volatility."
DTCC said, Lehman was a leading participant in its depository,
clearing corporations and OTC derivatives business. It ranked
as a top three user of DTCC's Mortgage Backed Securities
Division; in the top five largest users of the Government
Securities Division and Deriv/SERV and in the top 10 participants
of National Securities Clearing Corporation and The Depository
Trust Company. Lehman Brothers International (Europe) was a
participant of DTCC's European Central Counterparty Ltd.
subsidiary.
DTCC subsidiaries, NSCC, the Fixed Income Clearing Corporation's
GSD and EuroCCP, are central counterparties guaranteeing that
most trades outstanding at the time of a bankruptcy of a member
firm as Lehman will be settled on the original terms. By acting
as CCPs, the clearing corporations step in between the seller and
buyer of each trade to assume the counterparty risk and the
responsibility to deliver the securities to the buyer and payment
to the seller.
Mortgage-backed and Government Securities
FICC's MBSD handled the liquidation of a gross position of
$329 billion in par value of Lehman's book of "to be announced"
mortgage-backed securities trades that were outstanding at the
time of its bankruptcy. Working with all the dealers, banks and
other firms with which Lehman had conducted trades, and acting
as a "CCP for a day," FICC MBSD was able to net down and resolve
almost 90% of the forward trades. Over these few weeks, FICC
gradually sold the remaining net obligations into the market with
no losses assessed against MBSD members' clearing deposits and
with no observed market impact.
Lehman's pending U.S. Government securities trades ran to
$190 billion (gross positions) at the time of the bankruptcy.
FICC's GSD guarantees the settlement of these trades once it
accepts them for clearing. In order to make good on its
guarantee, FICC had to close out the various positions, which
ranged from repos to government bonds. FICC closed out these
positions without impact on customers.
Equities, Municipal and Corporate Bonds
NSCC, which is responsible for clearing and settlement of
virtually all broker-to-broker trades in the U.S. in equities and
corporate and municipal debt securities, faced total exposure of
approximately $5.85 billion from Lehman Brothers at the time its
accounts were closed.
NSCC's goal at this stage was to mitigate risk for its members
and avoid significant disruption in the marketplace. This
included processing and guaranteeing $3.8 billion in options
exercises and assignments from The Options Clearing Corporation
for the quarterly expiration on September 19. The close out
of these Lehman positions at NSCC is substantially complete.
Most of these positions have been liquidated, and there are not
expected to be any losses in excess of the Lehman clearing fund
held, resulting in no losses to be allocated to other NSCC
members.
A portion of Lehman's obligations at NSCC was resolved when
DTCC's subsidiary, The Depository Trust Company, took the lead
in working with Lehman's pledgee bank to arrange for the release
of $1.9 billion in securities, which were used to satisfy open
trades at NSCC. As a result, NSCC did not need to go to the
marketplace to purchase securities to complete these trades.
In addition, DTC managed the net debit cap controls on Lehman's
accounts throughout this period to limit any potential loss to
the depository and its participants.
FICC and NSCC retained a third party adviser to assist in
liquidating positions held by the clearing corporations. The
third party adviser provided advice and helped determine the best
strategy to hedge the portfolios, minimize risk and conduct an
orderly liquidation without disrupting the markets.
EuroCCP
EuroCCP, a U.K.-based subsidiary of DTCC which is providing pan-
European clearing and settlement services for multilateral
trading facilities, also had to deal with closing out trading
positions for Lehman Brothers International (Europe) just one
month after its start of business and even before EuroCCP
officially went into full production on September 22.
EuroCCP suspended Lehman from new trade input on September 15,
but continued to settle as many of the open positions as
possible with Lehman's agent banks so it could deliver the
securities to other participants on the same day. Lehman had
open trades in 12 markets and six currencies, totaling almost
21 million. About 5 million in trades were settled by Lehman's
agents on September 15.
EuroCCP ceased to act for Lehman once it became clear that
Lehman's agent banks would no longer be settling the remaining
positions. EuroCCP engaged a broker to close out the 16 million
in remaining positions. EuroCCP settled with the broker on T+1,
instead of the usual T+3 cycle, which accelerated the
fulfillment of its obligations to participants who were awaiting
delivery of securities. EuroCCP completed its closeout of
Lehman's open positions without the need to use EuroCCP's
Guarantee Fund.
OTC Derivatives Trade Information Warehouse
DTCC also acted to minimize risk for its OTC derivatives
customers from the Lehman bankruptcy. The actions included
stopping the automated central settlement of credit default swap
payment obligations on September 15 that were maintained in
DTCC's Trade Information Warehouse for counterparties of Lehman
Brothers International (Europe) and Lehman Brothers Special
Financing, Inc. DTCC also assisted counterparties in removing
from the Warehouse more than 300,000 CDS contract positions that
market participants held with Lehman.
On October 21, DTCC also completed, without incident, the
automated credit event processing of Lehman Brothers Holdings
Inc. involving $72 billion of credit default swaps. DTCC
calculated and bilaterally netted all amounts due on credit
default swaps written on LBHI. This resulted in approximately
$5.2 billion owed from net sellers of protection on LBHI to net
buyers of protection. The portion of this net funds settlement
allocable to trades between major dealers was handled through the
normal settlement procedures of CLS Bank International, DTCC's
settlement partner for the Warehouse and the world's central
settlement bank for foreign exchange.
DTCC's Comprehensive Risk Management and Strategy
With a 35-plus year history in clearance and settlement, DTCC was
able to draw upon its proven experience in effectively managing
and controlling risk associated with a financial firm failure.
As part of its comprehensive risk process, DTCC regularly puts
its risk and operating systems, well as staff, through intensive
testing that simulate the possibility of a crisis. These
exercises involve simulating the steps DTCC would have to take to
respond to a major financial firm failure. Even though it seemed
like a far-fetched scenario at the time, on two occasions over
the past 12 months, DTCC actually conducted tabletop exercises
simulating the failure of a major investment bank. Members of
DTCC's Board and representatives of various regulatory authorities
participated in the second of these exercises as observers.
"Although we didn't really expect to have to put the experience
we gained from those exercises to work any time soon, events
proved otherwise," Mr. Donahue said. "They both provided highly
useful practice runs for what DTCC and our market participants
have been dealing with in recent months."
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
LITTLEFIELD TEXAS: Stable Fund Prompts Fitch to Upgrade Rating
--------------------------------------------------------------
In the course of routine surveillance, Fitch upgrades the rating
on Littlefield, Texas' outstanding $1.4 million combination tax
and revenue certificates of obligation, series 1997 to 'BBB-' from
'BB+.' The CO's constitute a general obligation of the city,
payable from ad valorem taxes limited to $2.50 per $100 taxable
assessed valuation. Additionally, the COs are secured by a pledge
of surplus water and sewer revenues. The Rating Outlook is
Stable.
The upgrade primarily reflects stabilization of general fund and
detention center fund finances. The general fund balance had been
at minimal levels in prior years, with a $25,000 total balance
(representing 0.6% of expenditures and transfers out) recorded in
fiscal 2004. However the recent imposition of a 0.25% increase in
the sales tax rate as well as tax base growth have helped
stabilize the general fund while reducing transfers amounts from
the water and sewer fund for operating support. Over the past two
fiscal years, sales tax collections have jumped over 40%,
reflecting partial and full year collections of the additional
tax. As a result, the 2007 general fund balance stood at
approximately $256,000, or 6.1% of expenditures and transfers out,
with further improvement anticipated for the close of fiscal 2008.
Detention center operations, which support a sizable amount of the
city's outstanding COs, experienced problems soon after the
issuance of the 2001 COs (not rated by Fitch) due to construction
delays, and the subsequent loss of all Texas Youth Commission
prisoners in 2003. While TYC offenders were replaced with state
of Wyoming prisoners, the impact on finances was severe and
continued through fiscal 2005, evidenced by a $350,000
unrestricted net asset deficit recorded in the detention center
fund during that year.
In addition, the detention center fund had to rely on support from
other funds, most notably a sizable transfer from the water and
sewer fund in fiscal 2004, to meet operational and debt service
needs. The contract to house Wyoming prisoners was terminated in
2006, and subsequently a new contract with the state of Idaho was
implemented. However, the historical movement of prisoners in and
out of the Littlefield facility demonstrates the difficulty of
maintaining long-term prisoner contracts.
Since then, detention center fund operations have shown
improvement. For 2006 and 2007, no outside financial support was
required. The fund deficit was reduced to approximately
$270,000 and debt service coverage of detention center COs was 1.1
times during fiscal 2007. While further financial improvement is
projected for the detention center fund, the fund deficit will
likely remain for sometime. In addition, the detention center COs
have historically been paid from non-property tax revenues. If
the city had to levy an interest and sinking fund tax to meet
these obligations, the city's tax rate would have to increase
substantially, which Fitch believes would be extremely difficult
to impose.
However, there are several positive factors at work which benefit
the city and its ability to meet its debt service demands. First,
the series 2000 CO sale included provisions for a fully funded
debt service reserve fund. Although the city utilized the reserve
fund to meet debt service requirements in 2001 due to the delay in
opening as well as the moratorium on TYC transfers to the
detention center, officials report that the reserve is currently
fully funded and since that time, has not been utilized to meet
debt service needs. For fiscal 2007, the restricted reserve stood
at $1.1 million (while fiscal 2007 debt service was approximately
$780,000).
In addition, the city's private operator, the Geo Group, is an
experienced jail operator and was able to quickly replace the
state of Wyoming prisoners without resorting to any layoffs. The
city maintains a long-term contract with the operator, although
there are provisions which allow the operator a 60 day notice to
terminate the contract. However, the operator has made
significant equity contributions to the detention center,
reportedly over $2 million, making it more difficult for the Geo
Group to walk away from this facility.
Finally, the water and sewer fund, which supports the remainder of
the city's general obligation debt, continues to record positive
results. For fiscal 2007, net revenues were $1.4 million,
providing more than 3x coverage on water and sewer related CO debt
service. The water and sewer fund, if needed, could support the
city's entire debt load.
Littlefield, with a population of 6,500, is located approximately
35 miles northwest of Lubbock and serves as the county seat for
Lamb County. The area is primarily rural in nature, with
agriculture services, government, manufacturing, and trade as key
components of the county's economy. The city's population and
taxable assessed valuation had been flat until recently; for
fiscal 2008, the city's tax base increased nearly 5% due to the
construction of several commercial projects as well as residential
development. While there is moderate tax payer concentration
among the top 10 taxpayers, there is generally a good mix of
industries within the list. Debt ratios are very low given the
level of non-property tax support for outstanding COs although
payout is slow. A small amount of debt issuance for water and
sewer improvements is planned for the near term.
LOCAL TV: Moody's Cuts CF and PD Ratings to 'Caa1' from 'B2'
------------------------------------------------------------
Moody's Investors Service downgraded Local TV Finance, LLC's
Corporate Family rating and Probability of Default rating to Caa1
from B2. Associated instrument ratings were also lowered. The
rating outlook is negative. These actions conclude the review
initiated on October 16, 2008.
The rating actions are driven by Moody's heightened concerns that
the company will face substantial revenue and cash flow
deterioration in 2009 due to the high probability of further
weakening in the U.S. economy and its impact on advertising
revenue. The depth and the severity of the expected decline
exceeds the cyclicality built into the former B2 CFR.
The ratings and negative outlook reflect Moody's belief that the
expected revenue and cash flow declines could increase the
company's already high total debt-to-EBITDA leverage to a
significantly higher level. Notably, Moody's believes Local TV's
cash balance ($20 million as of June 30, 2008) will provide enough
cushion to absorb the cash flow declines and allow the company to
continue to pay cash interest on its senior unsecured PIK toggle
notes through 2009.
However, projected negative free cash flow associated with the
downturn and net of requisite amortization payments is expected to
deplete most of this cash and, absent any credit agreement
amendments, may limit the company's access to its currently
undrawn revolving credit facility by late 2009 as it would be
expected to have little-to-no room to remain compliant with the
facility's financial leverage maintenance covenant by that time.
Moody's notes that the PIK toggle notes do offer the company some
considerable flexibility in managing its cash flows, and believes
this will become a much more heavily considered option and one
that is likely exercised next year, notwithstanding the ensuing
negative impact on the company's key credit metrics, including
debt-to-EBITDA leverage.
Moody's has taken these rating actions:
Issuer -- Local TV Finance, LLC:
* Corporate Family Rating -- Downgraded to Caa1 from B2
* Probability of Default Rating -- Downgraded to Caa1 from B2
* $30 million Senior Secured Revolving Credit Facility --
Downgraded to B2 from Ba3 (LGD 2, 29%)
* $275 million Senior Secured Term Loan -- Downgraded to B2 from
Ba3 (LGD 2, 29%)
* $190 million PIK Toggle Senior Notes -- Downgraded to Caa3
(LGD 5, 84%) from Caa1 (LGD 5, 83%)
* Outlook -- Revised to Negative from Review for possible
downgrade
Local TV's ratings reflect significant debt-to-EBITDA leverage of
9.4x, minimal free cash flow generation capacity and Moody's
expectations that credit metrics will come under increasing
pressure in light of the current downturn in the economy. The
ratings further reflect the company's modest scale, the inherent
cyclicality of advertising spending and the increasing business
risk associated with the broadcast television industry as
advertising spending gets fragmented over a growing number of
media.
The company's ratings are supported, however, by the diversity of
Local TV's network affiliations, the diversity of cash flow from
its markets, a significant proportion of local advertising
revenues, and its dominant positions in local news and #1 or #2
positions in revenue share for most markets.
Local TV Finance, LLC, headquartered in Fort Worth, Texas, owns
nine television broadcasting stations in eight mid-sized markets
(DMAs 43-100).
LUMINENT MORTGAGE: Taps Provtiviti as Financial Advisor
-------------------------------------------------------
Luminent Mortgage Capital Inc. and its debtor-affiliates ask
the United States Bankruptcy Court for the District of Maryland
for permission to employ Provtiviti Inc. as their financial
advisor.
The firm will:
a) prepare analyses for and attend meetings and negotiate with
representatives of creditors and other parties in interest;
b) assist counsel in prosecuting actions on the Debtors' behalf,
defending actions commenced against the Debtors and
evaluating claims filed against the estates;
c) assist the Debtors in filing and obtaining approval of a
disclosure statement and confirmation of the Debtors' plan
of reorganization;
d) prepare cash flow projections and valuations of the Debtors'
businesses as required in connection with the Debtors'
disclosure statement and confirmation of the Debtors' plan
of reorganization;
e) offer testimony regarding the financial condition of the
Debtors, administration or recovery of estates and other
matters to protect the interest of the Debtors' estates;
f) assist the Debtors in preparing and filing required
compliance filing such as bankruptcy schedules, statements of
financial affairs, monthly operating reports, and reporting
as may be required by lenders and other creditors;
g) assist the Debtors in obtaining authority to use cash
collateral and any potential postpetition financing; and
h) perform all other necessary financial consulting services to
the Debtors in connection with these Chapter 11 cases.
The firm's professionals and their compensation rates are:
Professionals Hourly Rates
------------- ------------
Guy A. Davis $460
Suzanne B. Roski $440
Alicia A. Loza $330
Eric M. Massell $220
Linda B. Seay $190
To the best of the Debtors' knowledge, the firm does not hold any
interest adverse to the Debtors' estate and their creditors, and
is a "disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
About Luminent Mortgage
Luminent Mortgage Capital, Inc. (OTCBB: LUMCE) is a real estate
investment trust, or REIT, which, together with its subsidiaries,
has historically invested in two core mortgage investment
strategies. Under its Residential Mortgage Credit strategy, the
Company invests in mortgage loans purchased from selected high-
quality providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA. Under its Spread
strategy, the company invests primarily in U.S. agency and other
highly-rated single-family, adjustable-rate and hybrid adjustable-
rate mortgage-backed securities.
Luminent and nine subsidiaries filed September 5, 2008, for relief
under Chapter 11 of the U.S Bankruptcy Code in the United States
Bankruptcy Court for the District of Maryland, Baltimore Division
(Lead Case No. 08-21389). Immediately prior to the filing, the
Debtor executed a Plan Support and Forbearance Agreement with
secured creditor Arco Capital Corp., Ltd., WAMU Capital Corp. and
convertible noteholders representing 100% of the outstanding
principal amount of its convertible notes.
Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents
the Debtors. The U.S. Trustee for Region 4 appointed creditors
to serve on an Official Committee of Unsecured Creditors. The
Committee selected Jeffrey Neil Rothleder, Esq., at Arent Fox LLP,
as its counsel.
Bloomberg News reports that Luminent listed debts of $484,100,000
and assets of $13,400,000 as of July 31, 2008. Bloomberg adds
that 30 largest unsecured creditors are owed a total of
$221,800,000. Wells Fargo & Co., indenture trustee for Luminent's
8-1/8% bonds due in 2027, is listed as the largest unsecured
creditor. The principal amount owed under the bonds is
$90,000,000, Bloomberg says.
Luminent and its debtor-subsidiaries continue to operate their
business as debtors-in-possession under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions
of the Bankruptcy Code and orders of the Bankruptcy Court.
LUMINENT MORTGAGE: Files Operating Report for September
-------------------------------------------------------
Luminent Mortgage Capital, Inc., and its subsidiaries have filed
Operating Reports for the month of September with the U.S.
Bankruptcy Court for the District of Maryland.
The Balance Sheets and Income Statements included in the Monthly
Operating Report are prepared on a stand alone basis for each
subsidiary that has filed for relief under Chapter 11 of the U.S.
Bankruptcy Code and include certain items such as liability
amounts for the guarantees of the debt of other subsidiaries. In
addition, this Monthly Operating Report does not include the
balances of certain subsidiaries that have not filed for relief
under the U.S. Bankruptcy Code. Therefore, the sum of these
entities are not representative of the consolidated financial
statements of Luminent Mortgage Capital, Inc. in accordance with
generally accepted accounting principles.
Full-text copies of the monthly operating report is available free
of charge at: http://researcharchives.com/t/s?345b
About Luminent Mortgage
Luminent Mortgage Capital, Inc. (OTCBB: LUMCE) is a real estate
investment trust, or REIT, which, together with its subsidiaries,
has historically invested in two core mortgage investment
strategies. Under its Residential Mortgage Credit strategy, the
Company invests in mortgage loans purchased from selected high-
quality providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA. Under its Spread
strategy, the Company invests primarily in U.S. agency and other
highly-rated single-family, adjustable-rate and hybrid adjustable-
rate mortgage-backed securities.
Luminent and nine subsidiaries filed September 5, 2008, for relief
under Chapter 11 of the U.S Bankruptcy Code in the United States
Bankruptcy Court for the District of Maryland, Baltimore Division
(Lead Case No. 08-21389). Immediately prior to the filing, the
Debtor executed a Plan Support and Forbearance Agreement with
secured creditor Arco Capital Corp., Ltd., WAMU Capital Corp. and
convertible noteholders representing 100% of the outstanding
principal amount of its convertible notes.
Bloomberg News reports that Luminent listed debts of $484,100,000
and assets of $13,400,000 as of July 31, 2008. Bloomberg adds
that 30 largest unsecured creditors are owed a total of
$221,800,000. Wells Fargo & Co., indenture trustee for Luminent's
8-1/8% bonds due in 2027, is listed as the largest unsecured
creditor. The principal amount owed under the bonds is
$90,000,000, Bloomberg says.
Luminent and its debtor-subsidiaries continue to operate their
business as debtors-in-possession under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions
of the Bankruptcy Code and orders of the Bankruptcy Court.
LYNX 2002-1: S&P Holds 'CCC-' Rating on Class D Notes
-----------------------------------------------------
Standard & Poor's Ratings Services raised its rating on the class
C notes issued by Lynx 2002-1 Ltd., a cash flow collateralized
debt obligation of CDO transaction managed by Structured Credit
Partners LLC, to 'A' from 'BBB'. At the same time, S&P affirmed
its ratings on the class B and D notes.
The raised rating reflects factors that have positively affected
the credit enhancement available to support the notes. These
factors include the de-levering of the transaction through the
paydown of 100% of the class A notes and approximately 4% of the
class B notes since the deal was issued in August 2002. According
to the most recent trustee report, dated Aug. 29, 2008, the class
B overcollateralization ratio was 290.99%, the class C O/C ratio
was 115.22%, and the class D O/C ratio was 97.99%. S&P affirmed
the ratings on the class B and D notes because they believes they
have sufficient credit enhancement available to maintain the
current ratings.
Rating Raised
Lynx 2002-1 Ltd.
Rating Balance (mil. $)
------ ----------------
Class To From Current Previous
----- -- ---- ------- --------
C A BBB 97.00 97.00
Ratings Affirmed
Lynx 2002-1 Ltd.
Class Rating
----- ------
B AAA
D CCC-
MARCAL PAPER: Court Approves 3rd Amended Disclosure Statement
-------------------------------------------------------------
The Hon. Morris Stern of the United States Bankruptcy Court
for the District of New Jersey approved a third amended
disclosure statement explaining a third amended Chapter 11 plan
of liquidation filed by Marcal Paper Mills Inc. on Oct. 22,
2008. Judge Stern held that the Debtor's amended disclosure
statement contains adequate information within the meaning of
Section 1125 of the United States Bankruptcy Code.
The Court also approved procedures proposed by the Debtor for
solicitation and tabulation of plan votes. Deadline for voting on
the plan is Dec. 18, 2008, 5:00 p.m.
A hearing is set for Jan. 8, 2009, to consider confirmation of
the Debtor's plan. Objections, if any, are due Dec. 18, 2008.
Overview of the Plan
The Plan provides for the sale of the Debtor's assets to the
purchaser, a designee of NexBank, SSB, in its capacity as
administrative agent on behalf of the prepetition second lien
lender, for $121,600,000, plus the assumption of certain other
liabilities, including:
a) cash of $6,100,000, in the amended plan obligation amount as
stated in the asset purchase agreement;
b) credit bid amount of $35,000,000, against the indebtedness of
the Debtor owing under the prepetition second lien secured
loan; and
c) assumption of the assumed liabilities in accordance with
terms of assumed liabilities in the asset purchase
agreement of $120,320,000.
The plan does not contemplate the continuation of the Debtor's
business after the sale is consummate, but the purchaser intends
to continue operating a similar business.
Furthermore, the plan provides for the disposition of the
excluded assets of the Debtor's estate, remaining as of the plan's
effective date, by the trustees of the claims trust and the D&O
trust. The cash proceeds realized from the sale, if any, will be
distributed by the liquidating trustee in accordance with the
terms of a liquidating trust agreement.
The plan classifies interests against and liens in the Debtor in
five classes. The classification of interests and claims are:
Treatment of Interests and Claims
Type Estimated Estimated
Class of Claims Treatment Amount Recovery
----- --------- --------- --------- ---------
unclassified administrative unimpaired $6,100,000 100%
unclassified reclamation unimpaired $80,000- 100%
$100,000
unclassified postpetition unimpaired $25,000,000- 100%
administrative $30,000,000
trade
unclassified priority tax unimpaired $200,000 100%
1 other priority unimpaired $100,000 100%
2 prepetition impaired $64,000,000- unknown
second lien $65,000,000
secured lender
3 other secured unimpaired $50,000- 100%
$100,000
4 general impaired $71,000,000 unknown
unsecured
5 old equity impaired n/a 0%
interest
Class 2 and 4 are entitled to vote for the Debtor's plan.
Each holders of Class 1 other priority claims will be paid in full
by the liquidating trustee from the amended plan obligation amount
on the plan's effective date.
A portion of the outstanding obligations under the prepetition
second lien secured loan will be satisfied (i) subject to
the extent of the credit bid of $35 million and (ii) any
remaining outstanding obligations in excess of the credit bid
amount under the prepetition second loan lien secured loan will be
deemed to be an allowed general unsecured claim and treated
in accordance with the amended plan.
Allowed other secured claims will be treated in accordance with
the sale order, which provides valid, perfected and unavoidable
lien, the purchaser will either exclude encumbered property from
the purchased assets, and assume and repay any liens and claims
encumbering the assets.
Each holders of Class 4 general unsecured claims will receive
a pro rata share of the net assets of the liquidation trust.
Holders of Class 5 equity interest will not receive any
distribution of the property and all interests will be canceled
under the amended plan.
A full-text copy of the Debtor's Third Amended Disclosure
Statement is available for free at:
http://ResearchArchives.com/t/s?3458
A full-text copy of the Debtor's Third Amended Chapter 11 Plan
of Liquidation is available for free at:
http://ResearchArchives.com/t/s?3459
A full-text copy of the Debtor's List of Equity Security Holders
is available for free at:
http://ResearchArchives.com/t/s?345c
Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc.
-- http://www.marcalpaper.com/-- is a privately-held, fourth
generation family business. Founded in 1932, it employs more than
900 people in its Elmwood Park, New Jersey and Chicago, Illinois
manufacturing operations. The company produces more than
160,000 tons of finished paper products, including bath tissue,
kitchen towels, napkins and facial tissue, distributed to retail
outlets for home consumption and to distributors for away-from-
home use in hotels, restaurants, hospitals, offices and
factories. The Debtor filed for chapter 11 protection on Nov. 30,
2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq.,
and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman &
Leonard P.A. represent the Debtor. The Debtors selected Logan
and Company Inc. as claims agent. Kenneth Rosen, Esq., and Mary
E. Seymour, Esq., at Lowenstein Sandler PC represent the Official
Committee of Unsecured Creditors. In its schedules filed with the
Court, the Debtor disclosed total assets of $178,626,436 and total
debts of $178,890,725.
MCDONALD TECHNOLOGIES: Moody's Withdraws Ratings for Biz. Reasons
-----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings for McDonald
Technologies International, Inc.:
-- Corporate Family Rating: Caa1
-- Probability of default rating: Caa2
-- $14 million senior secured term loan: Caa1 (LGD3 -- 36%)
Moody's has withdrawn these ratings for business reasons.
The previous rating action occurred on October 16, 2008 when
Moody's downgraded McDonald Technologies' corporate family and
senior secured term loan ratings to Caa1 from B3 and probability
of default rating to Caa2 from B3. Simultaneously, the ratings
outlook was revised to negative from stable.
Headquartered in Farmers Branch, Texas, McDonald Technologies is
an EMS company engaged in the assembly of PCB, back-planes, cable
harnesses, and electro-mechanical assemblies. Focusing on high-
mix/low volume production and design capabilities, the company's
products are used for applications including communications,
seismic imaging, electronic voting systems, industrial controls
and aerospace industries.
MEDICAL SOLUTIONS: Vicis Capital Discloses 82.6% Equity Stake
-------------------------------------------------------------
Vicis Capital LLC disclosed in a Securities and Exchange
Commission filing that it may be deemed to beneficially own
80,251,846 shares of Medical Solutions Management, Inc.'s common
stock, representing 82.6% of the shares issued and outstanding.
Going Concern Doubt
As reported in the Troubled Company Reporter on May 14, 2008,
Boston-based Wolf & Company, P.C., expressed substantial doubt
about Medical Solutions Management Inc.'s ability to continue as
a going concern after auditing the company's financial statements
for the year ended Dec. 31, 2007.
The auditing firm reported that the company's losses have resulted
in an accumulated deficit of $153,000,000 as of Dec. 31, 2007,
negative working capital of $2,100,000 and in 2007 operating
activities consumed $7,800,000 of cash.
The company's losses have resulted in an accumulated deficit of
$156,587,501 as of June 28, 2008. Operating activities consumed
$3,303,216 in cash in the six months ended June 28, 2008. In
addition, the company has negative working capital of $5,792,587
as of June 28, 2008. These conditions raise substantial doubt
about the company's ability to continue as a going concern.
Medical Solutions Management Inc.'s consolidated balance sheet at
June 28, 2008, showed $7,207,543 in total assets and $12,848,837
in total liabilities, resulting in $5,641,294 in total
stockholders' deficit.
At June 28, 2008, the company's consolidated balance sheet also
showed strained liquidity with $7,207,543 in total current assets
available to pay $12,848,837 in total current liabilities.
The company reported a net loss of $3,121,245 on total revenue of
$2,407,863 for the second quarter ended June 28, 2008.
About Medical Solutions
Headquartered in Marlborough, Massachusetts, Medical Solutions
Management, Inc., (OTC BB: MSMT.OB) -- markets and sells
orthopedic and podiatric durable medical equipments in the United
States. It enables orthopedic and podiatric practices to dispense
an array of durable medical equipment directly to their patients
during office visits through its turnkey programs. The company
also provides billing services, inventory management, and
insurance verifications, as well as offers related management
services.
MERITAGE HOMES: Posts $144 Million Net Loss for Third Quarter 2008
------------------------------------------------------------------
Meritage Homes Corporation reported a net loss of $144 million for
the third quarter of 2008, including real estate-related and joint
venture charges of $55 million (pre-tax), and a deferred tax asset
valuation allowance of $106 million.
By comparison, the net loss of $119 million reported for the third
quarter of 2007 included $172 million (pre-tax) of real estate-
related and joint venture charges, and an additional $45 million
(pre-tax) charge to impair goodwill. Excluding these primarily
non-cash charges, the third quarter 2008 pre-tax loss was
$7 million, compared to pre-tax income of $24 million in the third
quarter of 2007, reflecting lower closing volume and revenue,
increased use of incentives and reduced margins on homes closed.
Third quarter 2008 home closing revenue declined 35% from the
prior year, as a result of 25% lower closings and a 14% decline in
average sale prices.
Gross margins excluding impairment charges fell, reflecting lower
net sales prices on fewer deliveries, partially offset by
construction cost reductions and a lower asset basis on homes
closed due to prior impairments. Third quarter gross margins were
12.7% before impairments in 2008, compared to 14.8% before
impairments in 2007.
"While Hurricane Ike hurt our Houston operations in early Sept.,
the financial crisis and slowing economy have damaged buyers'
confidence and resulted in further declines in home sales and
asset values," said Steven J. Hilton, chairperson and CEO of
Meritage. "That prompted us to record further real estate
impairments in our third quarter. Based on greater uncertainty as
to the timing of an eventual recovery in homebuilding, we
concluded this quarter that a valuation allowance against our
deferred tax asset was warranted."
Impairments of existing projects accounted for $35 million of the
total third quarter real estate-related charges, with additional
impairments of $13 million on land held for sale, $6 million of
option terminations and $1 million related to joint venture
impairments. More than half of the third quarter 2008 real estate
impairments were in Arizona, primarily from the four attached home
communities that Meritage has in Phoenix. California made up
another 20% of the impairments, as housing markets there were
further battered by falling prices and an over-supply of new and
existing inventory.
Meritage reported a year-to-date net loss of $213 million in 2008,
including primarily non-cash real estate-related and joint venture
charges of $154 million (pre-tax), and the deferred tax asset
valuation allowance of $106 million. By comparison, the year-to-
date net loss of $160 million in 2007 included $269 million (pre-
tax) of real estate-related and joint venture charges, and a $73
million (pre-tax) charge to impair goodwill. Year-to-date 2008
home closing revenue also declined 35% from the prior year,
consistent with the third quarter, as a result of 25% lower
closings and a 13% decline in average sale prices.
Meritage controlled overhead costs relative to its decline in
revenue, reducing general and administrative expenses by
$24 million (31%) year-to-date, to 4.7% of year-to-date revenue in
2008, compared to 4.4% in 2007. Excluding a $10 million benefit
in the second quarter 2008 related to a successful legal
settlement, year-to-date general and administrative expenses were
$63 million, or 5.6% of year-to-date revenue.
Despite being a build-to-order homebuilder, cancellations resulted
in a sequential increase of Meritage's inventory of unsold homes,
which rose to 809 as of Sept. 30, 2008, from 725 the previous
quarter, yet were 34% lower than Sept. 30, 2007.
The company ended the quarter with $119 million in cash, no bank
debt and $338 million available under the terms of its credit
facility. Delayed closings and higher inventory levels reduced
net cash flow in the third quarter. Despite that, Meritage was
modestly cash flow positive for the quarter, and has generated
more than $106 million positive cash flow from operations in the
first three quarters of 2008.
Meritage's net debt-to-capital ratio was 46% at Sept. 30, 2008,
compared to 41% at the end of the previous quarter and 50% at
Sept. 30, 2007. The increase this quarter was due to a reduction
in shareholders' equity from the net loss, driven primarily by the
deferred tax valuation allowance and real estate impairments.
Meritage was in compliance with all covenants under its amended
credit facility as of Sept. 30, 2008.
The total of 20,738 lots controlled at Sept. 30, 2008, was 62%
lower than its peak three years earlier, and down from 21,902 at
June 30, 2008. Consistent with management's strategy to reduce
risks associated with owning long land positions in depreciating
markets, the company's 1.4-year supply of owned lots (based on
trailing twelve months' closings) is one of the lowest in the
homebuilding industry.
The company's consolidated balance sheet as of Sept. 30, 2008,
shows $1.45 billion in total assets, $848.85 million in total
assets and $604.89 million in total shareholders' equity.
Summary and Outlook
Mr. Hilton concluded, "We believe that true demand for homes is
being depressed by the volatility in the financial markets and the
constant barrage of negative news. It appears that this has
caused many buyers to defer home purchases until prices and
economic conditions stabilize. A few markets such as Sacramento
have shown sales increases recently, as buyers have taken
advantage of the large selection and lower prices on homes, and
brought down inventories despite additional foreclosures.
However, those isolated bright spots may not be indicative of the
market in general, so we are emphasizing a more defensive strategy
going forward.
"We will focus our efforts on reducing Meritage's inventory of
unsold homes, reducing construction costs and overhead expenses,
generating cash and protecting our balance sheet. We'll be very
cautious in acquiring any new lot positions.
"Despite lower sales and current market conditions, we expect to
generate positive cash flow for the next several quarters from our
continued reduction of inventory and projected collection of
roughly $80 million in tax refunds in the first half of 2009.
"We are hopeful that the actions being taken by the federal
government and other international leaders will restore faith in
the credit markets, ease liquidity and stem the tide of
foreclosures. We will continue to focus on protecting our balance
sheet, and we believe that we are in markets that will offer some
of the best long-term opportunities for homebuilders."
About Meritage Homes
Headquartered in Scottsdale, Arizona, Meritage Homes Corporation
(NYSE: MTH) -- http://www.meritagehomes.com/-- builds primarily
single-family homes across the southern and western United States
under the Meritage, Monterey and Legacy brands. Meritage has
active communities in Houston, Dallas/Ft. Worth, Austin, San
Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the California
East Bay/Central Valley and Inland Empire, Denver and Orlando.
The company was ranked by Builder magazine in 2007 as the 12th
largest homebuilder in the U.S. and ranked #803 on the 2008
Fortune 1000 list.
Meritage Homes has reported six consecutive quarterly net losses
beginning the second quarter ended June 30, 2007.
* * *
As disclosed in the Troubled Company Reporter on June 16, 2008,
Fitch Ratings has downgraded Meritage Homes Corporation's Issuer
Default Rating and other outstanding debt ratings as: IDR to 'B+'
from 'BB-'; and Senior subordinated debt to 'B-/RR6' from 'B'.
Fitch has also affirmed Meritage Homes' senior unsecured debt at
'BB-' and assigned a Recovery Rating of 'RR3'. The Rating Outlook
remains Negative.
MERVYN'S LLC: GOB Sale Begins November 1; Panel Withdraws Protest
-----------------------------------------------------------------
Mervyn's LLC disclosed that the Official Committee of Unsecured
Creditors withdrew its motion to liquidate Mervyns' assets under
Chapter 7 of the U.S. Bankruptcy Code and its objection to the
company's proposed going out of business sales, all as part of
the settlement reached between Mervyns, the Creditors' Committee
and the company's debtor-in-possession financing provider.
The U.S. Bankruptcy Court for the District of Delaware has
authorized Mervyns to hold GOB sales at all of the company's
remaining 149 locations and to wind down the business as planned.
Mervyns and its board of directors believe that implementing this
process through Section 363 under Chapter 11 of the U.S.
Bankruptcy Code is the best course of action to maximize value
for all of the company's creditors, employees and other
stakeholders.
Mervyns also received Court approval to honor its accrued
vacation policies to all employees, including those already
terminated, upon full repayment of its DIP financing. The
company expects to satisfy its obligations to its DIP financing
provider by early December. If the performance of the company
is in accordance with its wind down budget, Mervyns will have
the resources to pay employees in full for all accrued vacation.
In addition, Mervyns received Court approval to retain Great
American Group as its agent to assist it in conducting the GOB
sales at all of its remaining stores. The GOB sales will
commence on Nov. 1, 2008.
The company stated, "We are pleased that this decision will
allow for the continued employment of many Mervyns employees
through the holiday season. In addition, we now expect that if
we meet our performance objectives we will be able to pay our
associates their accrued vacation compensation as originally
planned before the Court injunction last week."
About Mervyn's LLC
Headquartered in the San Francisco Bay Area, Mervyn's LLC --
http://www.mervyns.com/-- provides a mix of top national brands
and exclusive private labels. Mervyn's has 176 locations in seven
states. Mervyn's stores have an average of 80,000 retail square
feet, smaller than most other mid-tier retailers and easier to
shop, and are located primarily in regional malls, community
shopping centers, and freestanding sites.
The company and its affiliates filed for Chapter 11 protection on
July 29, 2008, (Bankr. D. Del. Lead Case No.: 08-11586). Howard
S. Beltzer, Esq., and Wendy S. Walker, Esq., at Morgan Lewis &
Bockius LLP, and Mark D. Collins, Esq., Daniel J. DeFranceschi,
Esq., Christopher M. Samis, Esq. and L. Katherine Good, Esq., at
Richards Layton & Finger P.A., represent the Debtors in their
restructuring efforts. Kurtzman Carson Consultants LLC is the
Debtors' claims agent. The Debtors' financial advisor is Miller
Buckfire & Co. LLC. Mervyn's LLC's balance sheet at Aug. 30,
2008, showed $665,493,000 in total assets and $717,160,000 in
total liabilities resulting in a $51,667,000 total stockholders'
deficit.
(Mervyn's Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
MGM MIRAGE: Moody's Cuts Ratings; Keeps All Ratings Under Review
----------------------------------------------------------------
Moody's Investors Service downgraded MGM MIRAGE's Corporate Family
rating and Probability of Default rating to Ba3 from Ba2. Moody's
also downgraded MGM's senior unsecured bond rating to Ba3 from Ba2
and its senior subordinated bond rating to B2 from B1. Moody's
also assigned a (P)Ba1 provisional rating to the company's
proposed benchmark senior secured guaranteed note. All ratings
remain on review for further possible downgrade. The company's
Speculative Grade Liquidity rating was also downgraded to SGL-4
from SGL-3.
The downgrade of MGM's ratings reflect rising leverage and weaker
interest coverage due to declining gaming demand and Moody's view
that the company's earnings will remain under pressure over the
next 12 months. Additionally, MGM faces high business risk
associated with the completion and ramp-up of its 50% owned City
Center project that may require more sponsor support than
currently anticipated.
The (P)Ba1 rating on MGM's proposed senior secured notes reflect
the superior position of the proposed notes relative to a large
amount ($13 billion) of MGM's existing senior and subordinated
unsecured debt. The proposed note is expected to be secured by
MGM's New York New York casino resort located on the Las Vegas
strip and guaranteed by all domestic subsidiaries that guaranty
MGM's other public and bank debt.
The downgrade of the SGL rating to SGL-4 reflects significant
refinancing risk in 2009 that cannot be supported from Moody's
projected internal cash flow and current revolver availability.
If MGM is able to create additional capacity under its revolving
credit facility or improve liquidity via other means and Moody's
become comfortable that it will remain comfortably in compliance
with financial covenants, the SGL rating could be upgraded to SGL-
3.
Ratings remain on review for further possible downgrade reflecting
volatile market conditions that could hamper the company's ability
to close the proposed new senior secured note offering and
complete the second phase of the $3.0 billion financing for City
Center, as well as the decline demand environment for gaming. The
review for possible downgrade will focus on MGM's success at
shoring up its liquidity profile via the benchmark senior secured
note offering, and syndication of the City Center financing.
It will also focus on MGM's ability to maintain a credit profile
and financial flexibility appropriate for a Ba3 rating within the
depressed Las Vegas lodging and gaming environment. This is
particularly key given the need to complete and ramp up the
massive City Center project in the midst of an unfavorable macro-
economic environment.
Ratings downgraded and remaining on review for further possible
downgrade.
MGM MIRAGE
-- Corporate Family Rating to Ba3 from Ba2
-- Probability of default rating to Ba3 from Ba2
-- Senior unsecured notes to Ba3 from Ba2
-- Senior subordinated notes to B2 from B1
-- Speculative Grade Liquidity Rating to SGL-4 from SGL-3
Mirage Resorts
-- Senior unsecured notes to Ba3 from Ba2
Mandalay Resort Group to Ba3 from Ba2
-- Senior unsecured notes to Ba3 from Ba2
-- Senior subordinated notes to B2 from B1
Provisional rating assigned and placed on review for possible
downgrade:
MGM MIRAGE
-- Senior secured guaranteed notes up to $1.0 billion at (P)Ba1
Headquartered in Las Vegas, Nevada, MGM MIRAGE owns and operates
17 properties located in Nevada, Mississippi and Michigan, and has
investments in three other properties in Nevada, New Jersey and
Illinois. MGM MIRAGE has a 50% interest in CityCenter Holdings,
Inc., a mixed-use project on the Las Vegas Strip and a 50%
interest in MGM Grand Macau, a hotel-casino resort in Macau S.A.R.
MGM MIRAGE: S&P Assigns 'BB' Issue-Level Rating on $1 Bil. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Las Vegas-based MGM MIRAGE and its
subsidiaries by one notch. The corporate credit rating was
lowered to 'BB-' from 'BB', and the rating outlook is negative.
At the same time, Standard & Poor's assigned its issue-level and
recovery ratings to the company's proposed senior secured notes of
up to $1 billion. The issue-level rating is 'BB' with a recovery
rating of '2', indicating the expectation for substantial recovery
in the event of a payment default. Proceeds from the proposed
notes will be used to repay a portion of the amount outstanding
under the company's $4.5 billion revolving credit facility.
"The downgrade of our corporate credit rating and existing issue-
level ratings reflects weaker-than-expected performance in the
quarter ended Sept. 30, 2008," said Standard & Poor's credit
analyst Ben Bubeck.
Property level EBITDA, adjusted for certain nonrecurring items,
declined 18%. Furthermore, with economic conditions remaining
challenging, S&P has lowered its expectation for operating
performance in 2009. Based on its current assumptions, S&P now
expects total operating lease-adjusted debt to EBITDA, excluding
income from unconsolidated affiliates, to peak in the low 7x area
-- a level no longer aligned with the previous 'BB' rating.
In addition, the downgrade reflects concerns that MGM MIRAGE may
need to contribute more to the CityCenter project than previously
contemplated. In S&P's Sept. 3, 2008 press release, it indicated
an expectation that the partners would need to contribute an
additional $500 million to $1 billion over the next 12 months to
complete the project. S&P stated that a ratings downgrade would
likely occur in the event that MGM MIRAGE is unsuccessful in
securing bank commitments for most, if not all, of the proposed $3
billion CityCenter financing, as shortfalls would need to be
funded by additional contributions from the company and Dubai
World.
While the company has completed an initial funding of $1.8 billion
and has reportedly secured an additional $500 million commitment,
S&P is concerned about its ability to secure commitments for the
remaining $700 million given the current state of the credit
markets. Absent the stabilization of operating performance over
the next few quarters, an additional $350 million of capital
spending would likely strain MGM MIRAGE's liquidity, perhaps to
the point that a further downgrade may be warranted.
While the proceeds of up to $1 billion from the proposed senior
secured notes will enhance the company's liquidity position, the
company faces bond maturities totaling nearly $1.3 billion in
2009. MGM MIRAGE has a senior secured indebtedness basket of
approximately $1 billion, which is 5% of consolidated net tangible
assets. This level was tightened from 10% as part of the recently
executed amendment to the company's $7 billion senior unsecured
bank facility. Given the limited access to capital under current
market conditions, S&P believes that a meaningful portion of these
proceeds will need to be earmarked to meet these 2009 maturities,
at least until market conditions improve.
The 'BB-' rating reflects MGM MIRAGE's high debt leverage and
somewhat limited geographic diversity, as the company relies on
the Las Vegas Strip for a majority of its cash flow. Still, MGM
MIRAGE maintains a satisfactory business risk profile, with a
significant position on the Las Vegas Strip, which, despite
current challenges stemming from a weak economy, offers a
substantial source of cash flow and solid long-term prospects.
MICRO-HEAT INC: Lender Consents to Use of Cash Collateral
---------------------------------------------------------
Judge Thomas J. Tucker of the U.S. Bankruptcy Court for the
Eastern District of Michigan, Southern Division, granted Micro-
Heat, Inc., interim authority to use the collateral securing its
obligations to M-Heat Investors, LLC.
Micro-Heat and M-Heat Investors stipulated to the entry of the
Interim Cash Collateral Order.
As of the bankruptcy filing date, Micro-Heat owed M-Heat Investors
$42,000,000 under a November 13, 2006 Note Purchase Agreement. As
security for repayment of the Secured Loan Obligations, the Debtor
granted to the Lender security interests in, and liens upon, its
inventory, accounts receivable, and other assets.
Pursuant to the stipulation, the Debtor also has agreed that its
cash and cash equivalents constitute the Lender's Cash Collateral.
On October 7, 2008, the Debtor had $4,000,000 in Available Cash.
The Debtor requires access to the Cash Collateral to continue its
operations, meet its payroll and other necessary, ordinary course
business expenditures, administer and preserve the value of its
estate, and maintain adequate access to cash to maintain customer
and vendor confidence.
The Lender has consented to the Debtor's use of Cash Collateral.
The Lender will be entitled to adequate protection pursuant to 11
U.S.C. Sections 361 and 363(e) with respect to the Cash Collateral
and other Prepetition Collateral, including, without limitation,
to compensate the Lender for any loss or diminution in the value
of the Cash Collateral or other Prepetition Collateral resulting
from the Debtor's use of the Cash Collateral, the use, sale or
lease of other Prepetition Collateral and the imposition of the
automatic stay during the Interim Cash Collateral Period. The
Debtor also granted the Lender a lien on certain claims against
General Motors Corporation and its affiliates subject to
litigation currently pending in the State of Michigan, Oakland
County Circuit Court and entitled Micro-Heat, Inc. v. General
Motors Corporation. The Lender, however, can't dip its hands on
the actions for preferences, fraudulent conveyances, and other
avoidance power claims under sections 544, 545, 547, 548 and 549
of the Bankruptcy Code.
The Lender's lien is subject to a carve-out for:
(a) the payment of allowed professional fees and disbursements
incurred by the professionals retained by the Debtor in an
amount not to exceed:
(i) the Debtor's bankruptcy counsel (including any local
bankruptcy counsel) -- in an amount equal to $225,000
for the first 60 days of the case. Any fees or
expenses incurred by the Debtor's bankruptcy counsel
after the first 60 days of the case will have no right
to payment from the Carve-Out;
(ii) the Debtor's litigation counsel -- in an amount equal
to $200,000 for the first 60 days of the case. Any
fees or expenses incurred by the Debtor's litigation
counsel after the first 60 days will have no right to
payment from the Carve-Out; and
(iii) the Debtor's financial advisors and auditors -- in an
amount equal to $30,000 for the first 60 days of the
case. Any fees or expenses incurred by the Debtor's
financial advisors and auditors after the first 60 days
of the case will have no right to payment from the
Carve-Out; and
(b) quarterly fees required to be paid pursuant to 28 U.S.C.
Section 1930(a)(6) and any fees payable to the Clerk of the
Bankruptcy Court.
Judge Tucker held that the Interim Cash Collateral Order will
remain in effect until the earliest of (i) December 10, 2008, at
5:00 p.m. (Eastern), (ii) the conclusion of the final hearing on
the Cash Collateral Stipulation authorizing the Debtor's continued
use of Cash Collateral or (iii) the breach of the termination
provisions provided in the Interim Order.
Objections, if any, to the entry of a final cash collateral order
are due by November 1, 2008. As to any Official Committee of
Creditors that may be appointed, the panel may file objections
within 15 days after it is served with the Interim Order. If an
objection is timely filed, the Court will convene a final hearing
on November 12, 2008, at 2:00 p.m. If no objections are timely
filed, the Interim Order may become a Final Order.
Headquartered in Farmington Hills, Michigan, Micro-Heat, Inc., --
http://www.microheat.com/-- makes and sells windshield washer
fluid heating systems to automobiles in North America, Australia
and Germany.
Micro-Heat filed a voluntary petition under Chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy
Court for the Eastern District of Michigan, citing liquidity
difficulties and risk of erosion in the value of its assets. The
petition was filed October 13, 2008 (Case No. 08-65060). Kramer
Levin Naftalis & Frankel LLP and Stuart A. Gold, Esq., at Gold,
Lange & Majoros, PC, provide bankruptcy advice. Plante & Moran
PLLC serves as the Debtor's financial advisors. When it filed for
bankruptcy, the Debtor estimated assets between $10 million and
$50 million, and debts between $10 million and $50 million.
ML-CFC COMMERCIAL: Fitch Cuts $5.5MM Class N Certs. Rating to B-
----------------------------------------------------------------
Fitch Ratings has downgraded seven classes of ML-CFC Commercial
Mortgage Trust's commercial mortgage pass-through certificates,
series 2007-5, and assigned Rating Outlooks as:
-- $55.2 million class F to 'BBB' from 'BBB+'; Outlook Negative;
-- $49.7 million class G to 'BBB-' from 'BBB'; Outlook Negative;
-- $49.7 million class H to 'BB' from 'BBB-'; Outlook Negative;
-- $16.6 million class J to 'BB-' from 'BB+'; Outlook Negative;
-- $11 million class K to 'B+' from 'BB'; Outlook Negative;
-- $11 million class L to 'B' from 'BB-'; Outlook Negative;
-- $5.5 million class N to 'B-' from 'B'; Outlook Negative.
In addition, Fitch has affirmed and assigned Rating Outlooks to
these classes:
-- $66.5 million class A-1 'AAA'; Outlook Stable;
-- $63.3 million class A-2 'AAA'; Outlook Stable;
-- $60 million class A-2FL 'AAA'; Outlook Stable;
-- $153.4 million class A-3 'AAA'; Outlook Stable;
-- $187.1 million class A-SB 'AAA'; Outlook Stable;
-- $1.090 billion class A-4 'AAA'; Outlook Stable;
-- $245 million class A-4FL 'AAA'; Outlook Stable;
-- $1.202 billion class A-1A 'AAA'; Outlook Stable;
-- $341.7 million class AM 'AAA'; Outlook Stable;
-- $100 million class AM-FL 'AAA'; Outlook Stable;
-- $211.5 million class AJ 'AAA'; Outlook Stable;
-- $175 million class AJ-FL 'AAA'; Outlook Stable;
-- Interest-only class X 'AAA'; Outlook Stable;
-- $77.3 million class B 'AA'; Outlook Stable;
-- $33.1 million class C 'AA-'; Outlook Stable;
-- $77.3 million class D 'A'; Outlook Stable;
-- $38.6 million class E 'A-'; Outlook Negative.
Fitch does not rate the $11 million class M, $11 million class P
or $45.7 million class Q certificates.
The downgrades of classes F through L, and N are the result of the
lowering of shadow rating on the transaction's largest loan, Peter
Cooper Village and Stuyvesant Town (18.2%) to below investment
grade.
The loan, which had a 'BBB-' shadow rating at issuance, is no
longer considered investment grade. At issuance, the loan's
proceeds were allocated to 'BBB-' and above, while they are now
allocated to all classes in the capital structure. This results
in higher credit enhancement requirements. While the current net
cash flow is not sufficient to meet the debt service obligations,
due to the sufficient amount of remaining interest reserves
($161.2 million) and the continued conversion of units to market
rental rates from stabilized rental rates, Fitch does not expect a
default of the loan in the near term.
However, the pace of the unit conversions does not meet
expectations at issuance and rental rates are less likely to
increase given the current economic conditions. Fitch's estimates
of future net cash flow, based on reduced conversion rates and
reduced year-over-year increases to market rental rates, no longer
support an investment grade rating. The borrower, Tishman Speyer
Properties, LP and Blackrock Realty acquired the property with the
intent to convert rent stabilized units to market rents as tenants
vacated the property, resulting in increased rental revenue. As
of June 2008 there are 3,543 market units and 7,210 rent
stabilized units, with vacancy of 4.2%.
The affirmations reflect stable performance and minimal pay down
since issuance. As of the October 2008 distribution date, the
pool's aggregate certificate balance has decreased 0.6% to
$4.389 billion from $4.417 billion at issuance.
One loan (0.1%) is currently in special servicing and is secured
by a retail property in Sarasota, Florida. The loan is 90 days
delinquent and the special servicer is pursuing foreclosure.
Fitch's expected losses will be absorbed by the non-rated class Q
certificates.
Fitch reviewed the most recent servicer provided operating
statement analysis reports for the remaining two shadow rated
loans: OMNI Portoflio (1.2%) and FRIS Chicken Portfolio (0.5%).
Based on the stable performance since issuance the loans maintain
their investment grade shadow ratings.
OMNI Portfolio (1.2%) is secured by three cross-collateralized and
cross-defaulted healthcare properties totaling 607 beds located in
Irvington, Jersey City and Union City, New Jersey. The properties
benefit from the experienced sponsorship of Avery Eisenreich, an
owner, operator, and developer of health care facilities in New
Jersey. As of Dec. 31, 2007, occupancy has remained stable at
96.7% compared to 97.7% at issuance.
FRIS Chicken Portfolio (0.5%) is secured by 192 Church's Chicken
quick service restaurants that are subject to one master lease and
are located in various cities throughout 12 states. Of the 192
units, 169 are occupied and operated by the tenant (Cajun
Operating Company), while the remaining 23 units are subleased by
the tenant to various Church's Chicken franchisees that perform
the restaurant operations at each of the units. As of Dec. 31,
2007, the properties remain 100% occupied since issuance.
ML-CFC COMMERCIAL: Fitch Cuts Ratings on Seven Class Certificates
-----------------------------------------------------------------
Fitch Ratings downgraded seven classes of ML-CFC Commercial
Mortgage Trust's commercial mortgage pass-through certificates,
series 2007-6 and assigns Rating Outlooks as:
-- $24.1 million class G to 'BBB-' from 'BBB'; Outlook Negative;
-- $26.8 million class H to 'BB+' from 'BBB-'; Outlook Negative;
-- $5.4 million class J to 'BB' from 'BB+'; Outlook Negative;
-- $5.4 million class K to 'BB-' from 'BB'; Outlook Negative;
-- $5.4 million class L to 'B+' from 'BB-'; Outlook Negative;
-- $5.4 million class M to 'B' from 'B+'; Outlook Negative;
-- $5.4 million class N to 'B-' from 'B'; Outlook Negative.
In addition, Fitch affirmed and assigned Rating Outlooks to these
classes:
-- $20.8 million class A-1 at 'AAA'; Outlook Stable;
-- $170.4 million class A-2 at 'AAA'; Outlook Stable;
-- $150 million class A-2FL at 'AAA'; Outlook Stable;
-- $60.7 million class A-3 at 'AAA'; Outlook Stable;
-- $730 million class A-4 at 'AAA'; Outlook Stable;
-- $364.4 million class A-1A at 'AAA'; Outlook Stable;
-- $214.6 million class AM at 'AAA'; Outlook Stable;
-- $107.4 million class A-J at 'AAA'; Outlook Stable;
-- $75 million class AJ-FL at 'AAA'; Outlook Stable;
-- Interest Only class X at 'AAA'; Outlook Stable;
-- $42.9 million class B at 'AA'; Outlook Stable;
-- $16.1 million class C at 'AA-'; Outlook Stable;
-- $34.9 million class D at 'A'; Outlook Stable;
-- $18.8 million class E at 'A-'; Outlook Stable;
-- $24.1 million class F at 'BBB+'; Outlook Negative;
-- $5.4 million class P at 'B-'; Outlook Negative.
Fitch does not rate the $26.8 million class Q.
The downgrades of classes G through N are the result of the
lowering of shadow rating on the transaction's second largest
loan, Peter Cooper Village and Stuyvesant Town (9.5%) to below
investment grade.
The loan, which had a 'BBB-' shadow rating at issuance, is no
longer considered investment grade. At issuance, the loan's
proceeds were allocated to 'BBB-' and above, while they are now
allocated to all classes in the capital structure. This results
in higher credit enhancement requirements. While the current net
cash flow is not sufficient to meet the debt service obligations,
due to the sufficient amount of remaining interest reserves
($161.2 million) and the continued conversion of units to market
rental rates from stabilized rental rates, Fitch does not expect a
default of the loan in the near term.
However, the pace of the unit conversions does not meet
expectations at issuance and rental rates are less likely to
increase given the current economic conditions. Fitch's estimates
of future net cash flow, based on reduced conversion rates and
reduced year-over-year increases to market rental rates, no longer
support an investment grade rating. The borrower, Tishman Speyer
Properties, LP and Blackrock Realty acquired the property with the
intent to convert rent stabilized units to market rents as tenants
vacated the property, resulting in increased rental revenue. As
of June 2008 there are 3,543 market units and 7,210 rent
stabilized units, with vacancy of 4.2%.
The affirmations are the result of stable performance since
issuance. The Rating Outlooks reflect the likely direction of the
rating changes over the next one to two years. As of the October
2008 distribution date, the pool's certificate balance has
decreased 0.34% to $2.139 billion from $2.146 billion at issuance.
Eighty-two loans (83.4%) are interest-only or partial interest-
only.
There is currently one loan (0.5%) in special servicing. The loan
is secured by a multifamily property in Petoskey, Michigan and is
90 days delinquent. Potential losses would be absorbed by the
non-rated class Q.
Fitch reviewed servicer provided operating statement analysis for
the remaining shadow rated loan, Westfield Southpark (7.0%). The
loan is secured by a 1,588,360 sf regional mall, located in
Strongsville, Ohio. The mall is anchored by Dillards (210,992sf),
Macy's (178,173 sf), Sears (167,400 sf), and J.C. Penny (145,330
sf), which are not part of the collateral. As of December 2007,
the in-line occupancy was 95.3% compared to 89.4% at issuance.
Based on stable performance since issuance, the loan maintains an
investment grade shadow rating.
MORGAN STANLEY: Stable Performance Cues Fitch to Affirm Ratings
---------------------------------------------------------------
Fitch Ratings affirmed and assigned Outlooks for Morgan Stanley
Capital I Trust, series 2007-TOP27, commercial mortgage pass-
through certificates as:
-- $82.8 million class A-1 at 'AAA'; Outlook Stable;
-- $279.3 million class A-2 at 'AAA'; Outlook Stable;
-- $137.4 million class A-3 at 'AAA'; Outlook Stable;
-- $112.3 million class A-AB at 'AAA'; Outlook Stable;
-- $1,077.1 million class A-4 at 'AAA'; Outlook Stable;
-- $287.8 million class A-1A at 'AAA'; Outlook Stable;
-- $172.3 million class A-M at 'AAA'; Outlook Stable;
-- $100 million class A-MFL at 'AAA'; Outlook Stable;
-- $190.6 million class A-J at 'AAA'; Outlook Stable;
-- $50.2 million class AW34 at 'AAA'; Outlook Stable;
-- Interest only class X at 'AAA'; Outlook Stable;
-- $54.5 million class B at 'AA'; Outlook Stable;
-- $30.6 million class C at 'AA-'; Outlook Stable;
-- $30.6 million class D at 'A'; Outlook Stable;
-- $23.8 million class E at 'A-'; Outlook Stable;
-- $23.8 million class F at 'BBB+'; Outlook Stable;
-- $30.6 million class G at 'BBB'; Outlook Stable;
-- $23.8 million class H at 'BBB-'; Outlook Stable;
-- $3.4 million class J at 'BB+'; Outlook Stable;
-- $3.4 million class K at 'BB'; Outlook Stable;
-- $6.8 million class L at 'BB-'; Outlook Stable;
-- $6.8 million class M at 'B+'; Outlook Stable;
-- $6.8 million class N at 'B'; Outlook Stable;
-- $3.4 million class O at 'B-'; Outlook Stable.
The $23.8 million class P is not rated by Fitch. Class AW34 is
collateralized by the 330 34th Street asset and is a non-pooled
loan.
The ratings affirmations are the result of stable performance
since issuance. The Rating Outlooks reflect the likely direction
of any rating changes over the next one to two years. As of the
October 2008 remittance, the transaction has paid down 0.4% to
$2.762 billion from $2.773 billion at issuance.
Fitch has identified five loans of concern (1.0%), two of which
are specially serviced (0.4%). Potential losses would be absorbed
by the non-rated class P. The largest specially serviced loan
(0.4%) is secured by a 97,733 square foot office property in
Jersey City, New Jersey. The loan was transferred to special
servicing in June 2008 due to monetary default and is currently
90+ days delinquent.
The second specially serviced asset (0.1%) is a retail property
located in St. Cloud, Florida. The property has suffered from an
increase in vacancy.
Fitch reviewed the most recent servicer provided operating
statement analysis reports for the 14 shadow rated loans (10.3%).
Based on their stable performance, the loans maintain their
investment grade shadow ratings.
The largest shadow rated loan (2.0%) is secured by the 75 room
Mercer Hotel in New York. As of year-end 2007, the average daily
rate and revenue per available room have increased to $683 and
$639, respectively, from $623 and $588, respectively, at issuance.
The second largest shadow rated loan (1.6%) is secured by a
280,060 square feet office building located in New York. As of YE
2007, occupancy at the property has increased to 99.9% from 87.2%
at issuance.
The fifth largest shadow rated loan (0.7%) is secured by a 285-
unit multifamily property in Bloomington, Indiana. Although the
property's net cash flow has declined since issuance, the
occupancy as of YE 2007 of 95.0% is in line with the occupancy at
issuance of 96.5%. Fitch will continue to monitor the NCF and
occupancy.
MRS FIELDS: SEC Deregisters Two Senior Secured Notes
----------------------------------------------------
The Securities and Exchange Commission has issued a termination of
registration certification/notice relating to Mrs. Fields Famous
Brands, LLC and Mrs. Fields Financing Company, Inc.'s existing 11-
1/2% Senior Secured Notes due 2011 and 9% Senior Secured Notes due
2011.
Pursuant to the company's out-of-court exchange offer and/or a
"pre-packaged" Chapter 11 filing and a plan of reorganization
confirmed under the United States Bankruptcy Code, the 11-1/2%
Notes and 9% Notes have been cancelled and are no longer
outstanding and the Issuers have agreed inter alia, to issue
$52,149,000 aggregate principal amount of 10% Senior Secured Notes
due 2014to holders of the Existing Notes plus cash and certain
equity interests of the Issuers in accordance with the terms of
the Exchange Offer.
About Mrs. Fields Famous Brands
Mrs. Fields Famous Brands LLC -- http://www.mrsfields.com/--
is a well established franchisor in the premium snack food
industry, featuring Mrs. Fields(R) and TCBY(R) as the company's
core brands. As of March 29, 2008, the company's franchise
systems operated through a network of 1,278 retail concept
locations throughout the United States and in 21 foreign
countries.
As reported in the Troubled Company Reporter on May 20, 2008,
Mrs. Fields Famous Brands LLC's consolidated balance sheet at
March 29, 2008, showed $147.2 million in total assets and
$247.2 million in total liabilities, resulting in a $100.0 million
member's deficit.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 18, 2008,
KPMG LLP, in Salt Lake City, expressed substantial doubt about
Mrs. Fields Famous Brands LLC's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 29, 2007. The auditing firm
pointed to the company's recurring net losses, negative cash flows
from, and net member's deficit at Dec. 29, 2007.
NELNET INC: Moody's Trims Senior Unsecured Rating to Ba1 from Baa2
------------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Nelnet, Inc.
(senior unsecured to Ba1 from Baa2) and placed the ratings on
review for possible further downgrade.
The downgrade reflects Moody's view that Nelnet's financial
flexibility has become constrained. The sharp deterioration of
the capital markets has resulted in a dramatic widening of credit
spreads for virtually every form of securitized product, including
the government guaranteed FFELP student loans financed in Nelnet's
core warehouse facility. This facility is subject to monthly mark
to market calculations, and the associated margin calls on the
company can be substantial.
To date, Nelnet has funded margin calls with draws on its
$750 million unsecured revolving credit facility and unrestricted
cash balances. However, the firm now has little remaining
capacity under its revolver, which presently has an outstanding
balance of $691.5 million, while cash balances of $80 million
provide only modest cushion. Nelnet's exposure to market risk
could result in additional margin calls that further deplete the
firm's cash resources.
"We are concerned that, given the distressed state of the capital
markets and the elevated balance of the company's unsecured
revolving credit facility, the company may not be able to generate
sufficient cash flow to repay unsecured debt, absent significant
refinancing and/or external capital raising actions," said Moody's
senior analyst Curt Beaudouin.
During its review of Nelnet's ratings, Moody's will focus on the
company's near-term strategy for addressing its liquidity and
funding challenges, including plans to repay unsecured revolver
outstandings and unsecured notes from operating cash flow and
potentially other capital raising actions. Additionally, Moody's
will consider how the firm's strategies could affect its financial
and operational profile over the medium to long term.
Nelnet (ticker symbol NNI), a leading education financial services
company based in Lincoln, Nebraska, reported total assets of
$28.4 billion as of June 30, 2008.
NEW CENTURY: Moody's Trims Ratings on 59 Tranches from Nine RMBS
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 59
tranches from 9 subprime RMBS transactions issued by New Century.
The collateral backing these transactions consists primarily of
first-lien, fixed and adjustable-rate, subprime residential
mortgage loans.
These actions follow and are as a result of Moody's September 18,
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: New Century Home Equity Loan Trust 2005-3
-- Cl. M-6, Downgraded to Ba1 from Baa2
-- Cl. M-7, Downgraded to B1 from Ba2
-- Cl. M-8, Downgraded to B3 from Ba3
-- Cl. M-9, Downgraded to Ca from Caa1
Issuer: New Century Home Equity Loan Trust 2005-4
-- Cl. M-5, Downgraded to A3 from A2
-- Cl. M-6, Downgraded to Baa3 from A3
-- Cl. M-7, Downgraded to B3 from Ba1
-- Cl. M-8, Downgraded to Ca from B2
-- Cl. M-9, Downgraded to Ca from B3
Issuer: New Century Home Equity Loan Trust 2006-1
-- Cl. A-2b, Downgraded to A3 from Aaa
-- Cl. A-2c, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to B1 from Aa2
-- Cl. M-2, Downgraded to Ca from Ba1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: New Century Home Equity Loan Trust 2006-2
-- Cl. A-2c, Downgraded to Baa1 from Aaa
-- Cl. A-2b, Downgraded to A3 from Aaa
-- Cl. M-1, Downgraded to Ba2 from A1
-- Cl. M-2, Downgraded to Caa3 from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: New Century Home Equity Loan Trust, Series 2005-1
-- Cl. M-8, Downgraded to B3 from B2
-- Cl. M-9, Downgraded to Ca from Caa2
Issuer: New Century Home Equity Loan Trust, Series 2005-2
-- Cl. M-5, Downgraded to Ba1 from Baa2
-- Cl. M-6, Downgraded to B2 from Ba1
-- Cl. M-7, Downgraded to Caa2 from B1
-- Cl. M-8, Downgraded to Ca from Caa1
-- Cl. M-9, Downgraded to Ca from Caa3
Issuer: New Century Home Equity Loan Trust, Series 2005-B
-- Cl. M-2, Downgraded to A1 from Aa2
-- Cl. M-3, Downgraded to Baa2 from A1
-- Cl. M-4, Downgraded to Ba3 from Baa1
-- Cl. M-5, Downgraded to Caa3 from Ba2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Ca
Issuer: New Century Home Equity Loan Trust, Series 2005-C
-- Cl. M-2, Downgraded to A1 from Aa2
-- Cl. M-6, Downgraded to Caa2 from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. M-10, Downgraded to C from Caa3
Issuer: New Century Home Equity Loan Trust, Series 2005-D
-- Cl. M-2, Downgraded to A1 from Aa2
-- Cl. M-3, Downgraded to Baa1 from A2
-- Cl. M-4, Downgraded to Ba1 from Baa2
-- Cl. M-5, Downgraded to B3 from Ba2
-- Cl. M-6, Downgraded to Ca from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. M-10, Downgraded to C from Caa3
NEXIA HOLDINGS: Issues 500MM Common Stock Shares to Richard Surber
------------------------------------------------------------------
Nexia Holdings Inc. disclosed in a Securities and Exchange
Commission filing that on Oct. 24, 2008, it authorized the
delivery to Richard D. Surber of 500,000,000 restricted shares of
the its Common Stock.
The issuance represents the conversion of 50,000 shares of Series
A Preferred Stock held by Mr. Surber.
On Oct. 24, 2008, the company approved the conversion of Series C
Preferred Stock by four employees into 117,000,000 shares of
common stock, all of the C shares had been held for a period in
excess of six months.
Upon completion of the issuance of these shares the total number
of issued and outstanding shares of common stock of the Company is
722,539,532.
About Nexia Holdings
Headquartered in Salt Lake City, Utah, Nexia Holdings Inc. (OTC
BB: NEXA) -- http://www.nexiaholdings.com/-- is a diversified
holdings company with operations in real estate, health & beauty,
and fashion retail. Nexia owns a majority interest in Landis
Lifestyle Salon, a hair salon built around the AVEDA(TM) product
lines. Through its Style Perfect Inc. subsidiary, Nexia owns the
retail and design firm Black Chandelier and its related brands.
Going Concern Doubt
Hansen Barnett & Maxwell, P.C., in Salt Lake City, expressed
substantial doubt Nexia Holdings Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007.
The company has incurred cumulative losses from operations through
June 30, 2008, of $27,020,252, and has a working capital deficit
of $2,569,857. The company reported a net loss of $768,333 on
total revenue of $680,439 for the second quarter ended June 30,
2008, compared with a net loss of $868,384 on total revenue of
$739,610 in the same period last year.
The company's consolidated balance sheet at June 30, 2008, showed
$3,910,593 in total assets, $12,111,986 in total liabilities, and
$174,568 in minority interest, resulting in a $8,375,961
stockholders' deficit. It has defaulted on several of its
liabilities, has closed three retail clothing stores, and has
entered into agreements to sell one of its commercial real estate
properties.
NEXTMEDIA OPERATING: S&P Affirms Corporate Credit Ratings at 'B-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its corporate credit
and issue-level ratings on Englewood, Colorado-based NextMedia
Operating Inc., and removed them from CreditWatch, where they were
placed with negative implications March 14, 2008. The corporate
credit rating was affirmed at 'B-' and the rating outlook is
negative.
"The CreditWatch resolution reflects NextMedia's successful
completion of the asset sales required by its amended credit
facility," explained Standard & Poor's credit analyst Jeanne
Mathewson. "The negative rating outlook reflects the continued
strain that we expect the company to face as financial covenants
tighten under continued cyclical pressure on advertising spending,
as well as a moderate chance of a further downgrade within the
coming year."
Revenue and EBITDA decreased 3.7% and 9.7%, respectively, for the
quarter ended Sept. 30, 2008. Outdoor advertising revenue was
flat, while radio advertising revenue declined 6%. S&P expects
the decline in advertising revenue to accelerate in the fourth
quarter and continue into 2009. Lease-adjusted debt to EBITDA rose
to 8.8x for the 12 months ended Sept. 30, 2008, from 8.1x a year
earlier. EBITDA coverage of interest was thin, at 1.2x, down from
1.5x a year earlier. The company converted a scant 3% of EBITDA
to discretionary cash flow for the 12 months ended Sept. 30, 2008,
and S&P expects discretionary cash flow to decline into negative
territory under the increased interest burden as a result of the
recent credit agreement amendment.
The credit agreement contains a minimum interest coverage ratio, a
maximum first-lien leverage ratio, and a maximum total leverage
ratio. As of Sept. 30, 2008, NextMedia had an adequate near-term
margin of compliance with all three financial covenants. However,
the company's debt to EBITDA was high, at roughly 8.4x, for the 12
months ended Sept. 30, 2008, versus an 9.0x covenant. EBITDA
coverage of interest was thin, at 1.4x, versus a 1.3x covenant.
The total leverage covenant is the most restrictive covenant. This
covenant tightens on Dec. 31, 2008. NextMedia will continue to
face covenant pressure in 2009 and beyond as all of the covenants
continue to tighten.
If the company is unable to increase EBITDA, it may need to
continue to sell assets and apply proceeds toward debt repayment
in order to maintain covenant compliance. The company has limited
liquidity and cash flow to meet any further increase in its bank
pricing and any fees associated with a waiver or amendment.
NOMURA: Moody's Chips Rtngs on 107 Tranches from 10 Subprime RMBS
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 107
tranches from 10 subprime RMBS transactions issued by Nomura. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, subprime residential mortgage
loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: Nomura Home Equity Loan Trust 2005-FM1
-- Cl. M-3, Downgraded to A3 from Aa3
-- Cl. M-4, Downgraded to Ba1 from A1
-- Cl. M-5, Downgraded to B3 from Baa2
-- Cl. M-6, Downgraded to Caa3 from Ba2
-- Cl. M-7, Downgraded to C from B2
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
Issuer: Nomura Home Equity Loan Trust 2005-HE1
-- Cl. M-6, Downgraded to Baa3 from Baa1
-- Cl. M-7, Downgraded to B3 from Ba3
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
Issuer: Nomura Home Equity Loan Trust 2006-FM1
-- Cl. II-A-3, Downgraded to Aa2 from Aaa
-- Cl. II-A-4, Downgraded to A1 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa1
-- Cl. M-2, Downgraded to Ba2 from Aa2
-- Cl. M-3, Downgraded to Caa2 from A1
-- Cl. M-4, Downgraded to Ca from Baa2
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
Issuer: Nomura Home Equity Loan Trust 2006-FM2
-- Cl. I-A-1, Downgraded to B2 from A2
-- Cl. II-A-2, Downgraded to Baa3 from Aa3
-- Cl. II-A-3, Downgraded to Caa1 from A3
-- Cl. II-A-4, Downgraded to Caa2 from Baa1
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Ca
-- Cl. M-8, Downgraded to C from Ca
Issuer: Nomura Home Equity Loan Trust 2006-HE1
-- Cl. M-1, Downgraded to A1 from Aa1
-- Cl. M-2, Downgraded to Baa3 from Aa2
-- Cl. M-3, Downgraded to B2 from Aa3
-- Cl. M-4, Downgraded to Caa2 from Baa1
-- Cl. M-5, Downgraded to C from Ba3
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
Issuer: Nomura Home Equity Loan Trust 2006-HE2
-- Cl. A-3, Downgraded to Aa3 from Aaa
-- Cl. A-4, Downgraded to A2 from Aaa
-- Cl. M-1, Downgraded to Ba1 from Aa1
-- Cl. M-2, Downgraded to Caa2 from A1
-- Cl. M-3, Downgraded to Ca from Baa3
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
Issuer: Nomura Home Equity Loan Trust 2006-WF1
-- Cl. M-2, Downgraded to A2 from Aa2
-- Cl. M-3, Downgraded to Baa1 from Aa3
-- Cl. M-4, Downgraded to Baa3 from A1
-- Cl. M-5, Downgraded to Ba2 from A2
-- Cl. M-6, Downgraded to B3 from A3
-- Cl. M-7, Downgraded to C from Baa1
-- Cl. M-8, Downgraded to C from Baa3
-- Cl. M-9, Downgraded to C from B1
-- Cl. B-1, Downgraded to C from B2
-- Cl. B-2, Downgraded to C from B3
Issuer: Nomura Home Equity Loan, Inc. Home Equity Loan Trust,
Series 2007-2
-- Cl. I-A-1, Downgraded to Baa3 from Aaa
-- Cl. II-A-1, Downgraded to Baa3 from Aaa
-- Cl. II-A-2, Downgraded to B3 from Aaa
-- Cl. II-A-3, Downgraded to Caa1 from Aa1
-- Cl. II-A-4, Downgraded to Caa2 from Aa3
-- Cl. M-1, Downgraded to C from Baa3
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
-- Cl. M-9, Downgraded to C from Ca
Issuer: Nomura Home Equity Loan, Inc., Home Equity Loan Trust,
Series 2006-HE3
-- Cl. I-A-1, Downgraded to A1 from Aa1
-- Cl. II-A-2, Downgraded to Aa2 from Aaa
-- Cl. II-A-4, Downgraded to Ba1 from Aa3
-- Cl. II-A-3, Downgraded to Baa3 from Aa1
-- Cl. M-1, Downgraded to Caa1 from Baa3
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Ca
Issuer: Nomura Home Equity Loan, Inc., Home Equity Loan Trust,
Series 2007-3
-- Cl. I-A-1, Downgraded to B2 from Aaa
-- Cl. II-A-1, Downgraded to Ba3 from Aaa
-- Cl. II-A-2, Downgraded to B3 from Aa2
-- Cl. II-A-4, Downgraded to Caa3 from A2
-- Cl. II-A-3, Downgraded to Caa2 from Aa3
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Ca
-- Cl. M-8, Downgraded to C from Ca
OFFICE DEPOT: Moody's Reviews 'Ba1' CF & PD Ratings for Likely Cut
------------------------------------------------------------------
Moody's Investors Service placed Office Depot, Inc.'s Ba1
corporate family rating, Ba1 probability of default rating, and
Ba2 senior note rating, on review for possible downgrade. The
review is in response to continued softness in the company's
operating performance through the third quarter of 2008. Office
Depot's SGL-3 speculative grade liquidity rating was affirmed.
Office Depot recently announced that its third quarter revenues
were down 7% from 2007, and operating profit for that same period,
about $53 million, is roughly 30% of the 2007 level. "The
California and Florida markets, in which Office Depot has a
disproportionate share of its revenues, continue to struggle from
a macroeconomic perspective, particularly housing and its related
segments, which are key small business markets for Office Depot.
Additionally, visibility with respect to the timing of a potential
rebound in these two critical states is limited," commented
Moody's Senior Analyst Charlie O'Shea. Moody's review will focus
primarily on Office Depot's fourth quarter operating performance.
A failure to stem the decline in operating results during the
current quarter would likely lead to a downgrade.
The affirmation of Office Depot's SGL-3 speculative grade
liquidity rating considers that despite revenue and profit
declines, liquidity remains adequate. The company recently
obtained a $1.25 billion asset-based revolving credit facility.
Office Depot, Inc., based in Delray Beach Florida, is the second
largest retailer of office supplies, with LTM September 2008
revenues of $15.1 billion and 1,275 retail locations in North
America.
OWNIT: Moody's Cuts Ratings on 87 Tranches from Nine Subprime RMBS
------------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 87
tranches from 9 subprime RMBS transactions issued by Ownit. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, subprime residential mortgage
loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: OwnIt Mortgage Loan Trust 2005-1
-- Cl. B-3, Downgraded to Ba1 from Baa3
-- Cl. B-4, Downgraded to Ba3 from Ba1
-- Cl. B-5, Downgraded to Ca from Ba2
Issuer: OwnIt Mortgage Loan Trust 2005-2
-- Cl. M-6, Downgraded to Baa1 from A3
-- Cl. B-1, Downgraded to Ba1 from Baa1
-- Cl. B-2, Downgraded to Caa2 from Baa2
-- Cl. B-3, Downgraded to C from Baa3
-- Cl. B-4, Downgraded to C from Ba1
-- Cl. B-5, Downgraded to C from Ba2
Issuer: Ownit Mortgage Loan Trust 2006-1
-- Cl. AF-2, Downgraded to A3 from Aaa
-- Cl. AF-3, Downgraded to Baa1 from Aaa
-- Cl. AF-4, Downgraded to A3 from Aaa
-- Cl. M-1, Downgraded to Ba2 from Aa1
-- Cl. M-2, Downgraded to Caa2 from Aa2
-- Cl. M-3, Downgraded to C from A1
-- Cl. M-4, Downgraded to C from Baa2
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
Issuer: Ownit Mortgage Loan Trust 2006-2
-- Cl. A-2C, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to A2 from Aa1
-- Cl. M-2, Downgraded to Baa3 from Aa2
-- Cl. M-3, Downgraded to B1 from Baa1
-- Cl. M-4, Downgraded to Caa2 from Ba2
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
Issuer: Ownit Mortgage Loan Trust 2006-3
-- Cl. A-2C, Downgraded to Aa1 from Aaa
-- Cl. A-2D, Downgraded to Aa3 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa1
-- Cl. M-2, Downgraded to Ba2 from Baa1
-- Cl. M-3, Downgraded to B3 from Ba1
-- Cl. M-4, Downgraded to Ca from B2
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
-- Cl. B-4, Downgraded to C from Ca
Issuer: Ownit Mortgage Loan Trust 2006-4
-- Cl. A-2C, Downgraded to A3 from Aaa
-- Cl. A-2D, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Ba1 from Aa3
-- Cl. M-2, Downgraded to Caa1 from Ba1
-- Cl. M-3, Downgraded to Ca from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
Issuer: Ownit Mortgage Loan Trust 2006-5
-- Cl. A-2C, Downgraded to A3 from Aaa
-- Cl. A-2D, Downgraded to Baa1 from Aa2
-- Cl. M-1, Downgraded to Ba2 from Baa2
-- Cl. M-2, Downgraded to Caa2 from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Ownit Mortgage Loan Trust 2006-6
-- Cl. A-1, Downgraded to Aa1 from Aaa
-- Cl. A-2B, Downgraded to Aa2 from Aaa
-- Cl. A-2C, Downgraded to Baa3 from Aaa
-- Cl. A-2D, Downgraded to Ba1 from Aa1
-- Cl. M-1, Downgraded to B2 from Baa1
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Ownit Mortgage Loan Trust 2006-7
-- Cl. A-1, Downgraded to A3 from Aaa
-- Cl. A-2B, Downgraded to A2 from Aaa
-- Cl. A-2C, Downgraded to B1 from Aaa
-- Cl. A-2D, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to Caa3 from A3
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
PAUL REINHART: Gets Interim Ok to Hire Grant Thornton as Adviser
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
granted Paul Reinhart Inc. permission, on an interim basis, to
employ Grant Thornton LLP as its financial and restructuring
advisor, nunc pro tunc to the petition date.
The Court also ordered that, in the absence of an objection to the
Debtor's employment of Grant Thornton, on or before the twenty-
three days from the Debtor's service of this Interim Order, this
Interim Order shall become a Final order without further notice or
hearing.
As the Debtor's financial and restructuring advisor, Grant
Thornton will:
a) assist management and legal counsel in evaluating financing
alternatives, including use of post-petition cash collateral
as well as possible debtor in possession financing
facilities;
b) assist management with its communications with customers,
suppliers, statutory committees, and other parties-in-
interest;
c) consult with management, in coordination with legal counsel,
in the preparation of a disclosure statement, plan and the
underlying business plans from which those documents are
developed;
d) assist management, in coordination with legal counsel, in
evaluating competing disclosure statements, plans and other
strategic proposals made by any statutory committee or other
interested parties in the Bankruptcy Case;
e) assist management in responding to information requests
submitted by statutory committees and their legal or
financial counsel.
f) consult with management regarding the preparation of required
financial statements, schedules of financial affairs, monthly
operating reports, and any other financial disclosures
required by the Bankruptcy Court;
g) provide expert advice and testimony regarding financial
matters related to, including, among other things, the
feasibility of any proposed plan; and
h) provide additional services as requested from time to time by
the Debtor and agreed to by Grant Thornton.
As compensation for their services, Grant Thornton's professionals
currently bill:
Classification Standard Hourly Rates
-------------- ---------------------
Partner/Principal/Director $610-$665
Senior Manager $485-$550
Manager $410-$455
Senior Consultant $290-$360
Consultant $215-$225
Administrative/Paraprofessional $75-$150
Grant Thornton has agreed to a 25% discount to these hourly rates.
Additionally, the firm has agreed that its blended average hourly
rate for professional services provided during the entire
engagement will not exceed $425. The Debtor told the Court that
it paid the firm a $200,000prepetition retainer for services to
performed in connection with and in contemplation of the filing of
the Bankruptcy Case.
John D. Bittner, a partner at Grant Thornton LLP, assured the
Court that the firm does not hold or represent any interest
adverse to the Debtor or its estate, and that it is a
"disinterested person" as that term is defined in Sec. 101(14) of
the Bankruptcy Code.
Based in Richardson, Texas, Paul Reinhart Inc. is a cotton
merchant serving organic and traditional growers and textile
mills. The company filed for Chapter 11 relief on Oct. 15, 2008
(Bankr. N.D. Tex. 08-35283). Deborah M. Perry, Esq., and E. Lee
Morris, Esq., at Munsch Hardt Kopf & Harr, P.C., represent the
Debtor as counsel. When the Debtor filed for protection from its
creditors, it listed assets of between $100 million and
$500 million, and the same range of debts.
PHYSICIANS MEDICAL: Schedules Filing Deadline Moved to Nov. 7
-------------------------------------------------------------
The Hon. Tamara O. Mitchell of the U.S. Bankruptcy Court for the
Northern District of Alabama extended the deadline for the filing
of the schedules of assets and liabilities and statement of
financial affairs to Novv. 7, 2008.
Physicians Medical Center, LLC, asked the Court to extend the
filing of the Debtor's Schedules to Nov. 17, 2008.
Pursuant to Bankruptcy Rules 1007(a)(3) and 1007(c) of the Federal
Rules of Bankruptcy Procedure, the Debtor is required to file its
schedules within 15 days after the filing of the bankruptcy
petition, unless the deadline is extended by the Court. The
Debtor filed for Chapter 11 protection on Oct. 20, 2008.
The Debtor told the Court that due to the size and complexity of
its case and the competing demands upon its employees to orderly
transfer patients to other local facilities and assist in efforts
to stabilize the its business operations during the
initial post-petition period, the Debtor will be unable to
accurately complete the schedules by the 15-day deadline.
The Debtor is operating its business and managing its financial
affairs as a debtor-in-possession pursuant to Sections 1107 and
1108 of the U.S. Bankruptcy Code. The Debtor is a limited
liability company organized and existing under the laws of the
state of Delaware with its principal place of business at 1600
Carraway Boulevard in Birmingham, Alabama.
The Debtor does business as Physicians Medical Center Carraway.
The Debtor's medical center is a teaching hospital, referral
center and acute care hospital that, together with its
predecessors, has served Birmingham and north central Alabama
for approximately 100 years. The Debtor is licensed for 617 beds
and has approximately 1,000 employees. The Debtor's primary
campus, which is located on approximately 45 acres north of
downtown Birmingham, consists of the main hospital
building, several professional office buildings, and limited
commercial retail space.
While providing a broad range of services, the Debtor emphasizes
cardiology, cardiac surgery and wound care. The Debtor also
operates a Level 3 trauma center with a 24-hour emergency
department. The Debtor dedicates significant
operational capacity to critical care, including coronary-surgical
intensive care units. The Debtor provides several unique
services, including a hyperbaric medicine unit used to
treat carbon monoxide poisoning, gangrene and osteomyelitis and an
advanced wound care clinic that treats problem wounds with
advanced biopharmaceutical techniques.
The Debtor offers accredited residency programs in family
medicine, general surgery and internal medicine, as well as an
approved transitional year program. The Debtor works closely with
the University of Alabama School of Medicine and other medical
schools to allow students to participate in rotations, and the
Debtor's medical center serves as a training site for residents in
the University of Alabama School of Medicine's anesthesiology
program.
About Physicians Medical
Based in Birmingham, Alabama, Physicians Medical Center, LLC,
formerly Carraway Methodist Medical Center, owns and operates a
617-bed acute care hospital which also serves as a training site
for residents in the University of Alabama School of Medicine's
anesthesiology program. The company filed for Chapter 11 relief
on Oct. 20, 2008 (Bankr. N.D. Ala. Case No. 08-0520). Christopher
L. Hawkins, Esq., and M. Leesa Booth, Esq., at Bradley Arant Rose
& White represent the Debtor in its restructuring efforts. The
Debtor listed assets of between $10 million and $50 million, and
debts of between $10 million and $50 million.
The Debtors' 20 largest unsecured creditors are owed a total of
$4.3 million. The three biggest unsecured creditors are McKesson
Information Solutions, owed $649,397; Cardinal Health, owed
$536,609; and Balch & Bingham LLP, owed $426,384. The Debtor has
about $8 million in secured debt.
POPULAR ABS: Moody's Cuts Ratings on 84 Tranches from 13 RMBS
-------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 84
tranches from 13 subprime RMBS transactions issued by Popular.
The collateral backing these transactions consists primarily of
first-lien, fixed and adjustable-rate, subprime residential
mortgage loans.
These actions follow and are as a result of Moody's September 18,
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-1
-- Cl. M-2, Downgraded to A3 from A2
-- Cl. M-3, Downgraded to Baa1 from A3
-- Cl. M-4, Downgraded to Baa2 from Baa1
-- Cl. B-1, Downgraded to Ba3 from Baa2
-- Cl. B-2, Downgraded to B2 from Baa3
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-2
-- Cl. M-2, Downgraded to A3 from A2
-- Cl. M-3, Downgraded to Baa1 from A3
-- Cl. M-4, Downgraded to Baa2 from Baa1
-- Cl. M-5, Downgraded to Baa3 from Baa2
-- Cl. M-6, Downgraded to Ba3 from Baa3
-- Cl. B-1, Downgraded to B3 from Ba2
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-3
-- Cl. M-2, Downgraded to Baa1 from A2
-- Cl. M-3, Downgraded to Baa2 from A3
-- Cl. M-4, Downgraded to Ba1 from Baa1
-- Cl. M-5, Downgraded to B1 from Baa2
-- Cl. M-6, Downgraded to Caa2 from Baa3
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-4
-- Cl. M-6, Downgraded to Ba1 from Baa3
-- Cl. B-1, Downgraded to B1 from Ba2
-- Cl. B-2, Downgraded to Caa2 from B2
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-5
-- Cl. MV-3, Downgraded to Baa2 from A3
-- Cl. MV-4, Downgraded to B1 from Baa2
-- Cl. MV-5, Downgraded to Caa2 from Ba3
-- Cl. MV-6, Downgraded to C from B2
-- Cl. BV-1, Downgraded to C from Caa1
-- Cl. BV-2, Downgraded to C from Caa2
-- Cl. BV-3, Downgraded to C from Caa3
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-6
-- Cl. M-1, Downgraded to A2 from Aa2
-- Cl. M-2, Downgraded to B3 from Baa2
-- Cl. M-3, Downgraded to Ca from Ba1
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
Issuer: Popular ABS Mortgage Pass-Through Trust 2005-D
-- Cl. M-4, Downgraded to Baa2 from Baa1
-- Cl. M-5, Downgraded to Ba2 from Baa2
-- Cl. M-6, Downgraded to B3 from Baa3
-- Cl. B-1, Downgraded to Ca from B1
-- Cl. B-2, Downgraded to C from B3
Issuer: Popular ABS Mortgage Pass-Through Trust 2006-A
-- Cl. M-5, Downgraded to Ba1 from Baa2
-- Cl. M-6, Downgraded to B1 from Baa3
-- Cl. B-1, Downgraded to Caa2 from Ba3
-- Cl. B-2, Downgraded to C from B2
Issuer: Popular ABS Mortgage Pass-Through Trust 2006-B
-- Cl. M-2, Downgraded to A3 from A2
-- Cl. M-3, Downgraded to Baa3 from Baa1
-- Cl. M-4, Downgraded to B2 from Ba3
-- Cl. M-5, Downgraded to Caa2 from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa3
Issuer: Popular ABS Mortgage Pass-Through Trust 2006-C
-- Cl. M-4, Downgraded to Caa2 from B2
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
Issuer: Popular ABS Mortgage Pass-Through Trust 2006-D
-- Cl. M-1, Downgraded to A3 from Aa2
-- Cl. M-2, Downgraded to B3 from Baa2
-- Cl. M-3, Downgraded to Caa2 from Ba3
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from B3
-- Cl. B-3, Downgraded to C from B3
Issuer: Popular ABS Mortgage Pass-Through Trust 2006-E
-- Cl. M-1, Downgraded to A2 from Aa2
-- Cl. M-2, Downgraded to Ba2 from A1
-- Cl. M-3, Downgraded to B3 from Baa1
-- Cl. M-4, Downgraded to Caa2 from Ba1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B1
-- Cl. B-1, Downgraded to C from B2
-- Cl. B-2, Downgraded to C from B3
-- Cl. B-3, Downgraded to C from Ba3
Issuer: Popular ABS Mortgage Pass-Through Trust 2007-A
-- Cl. A-3, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa2
-- Cl. M-2, Downgraded to Baa2 from Aa3
-- Cl. M-3, Downgraded to Ba1 from A2
-- Cl. M-4, Downgraded to Ba3 from Baa1
-- Cl. M-5, Downgraded to B2 from Baa2
-- Cl. M-6, Downgraded to Caa2 from Ba1
-- Cl. M-7, Downgraded to Ca from Ba3
-- Cl. M-8, Downgraded to C from B1
-- Cl. B-1, Downgraded to C from B1
-- Cl. B-2, Downgraded to C from B1
-- Cl. B-3, Downgraded to C from B1
PREMIUMLOAN TRUST: S&P Puts 'BB' Notes Ratings Under Neg. Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the class
A, X, B, C, and D notes issued by PremiumLoan Trust I Ltd., an
arbitrage high-yield collateralized loan obligation transaction
managed by Lehman Bros. Asset Management, on CreditWatch
with negative implications.
The negative CreditWatch placements primarily reflect volatile
market conditions that have affected the overcollateralization
ratios. As a result of lower market values, the class A
overcollateralization ratio has fallen below 103%, thus triggering
an event of default. In addition, the Sept. 15, 2008, bankruptcy
of Lehman Bros. Holdings Inc. limited the availability of the
transaction's liquid holdings on deposit in Lehman Liquidity
Funds, which led to a shortfall in payments of principal to the
class A notes on the Oct. 27, 2008, payment date.
Standard & Poor's will review the transaction and will examine the
results of current cash flow runs to determine the level of future
defaults the rated classes can withstand under various stressed
default timing and interest rate scenarios while still paying all
of the interest and principal due on the notes. S&P will compare
the results of these cash flow runs with the projected default
performance of the performing assets in the collateral pool to
determine whether the ratings currently assigned to the notes
remain consistent with the credit enhancement available.
Ratings Placed on Creditwatch Negative
Premium Loan Trust I Ltd.
Rating
------
Class To From Balance (mil. $)
----- -- ---- ----------------
A AAA/Watch Neg AAA 125.629
X A+/Watch Neg A+ 8.656
B A/Watch Neg A 10.000
C BBB/Watch Neg BBB 11.000
D BB/Watch Neg BB 6.156
PRIMEDIA INC: To Release Third Quarter Results November 8
---------------------------------------------------------
Primedia Inc. disclosed in a Securities and Exchange Commission
filing that it will release its third quarter 2008 results before
the market open on Thursday, Nov. 6, 2008, to be followed by a
conference call at 10:00 a.m. (Eastern Time).
Investors and interested parties may listen to a Webcast of the
presentation by visiting its Web site at http://www.primedia.com
under the investor relations section.
About PRIMEDIA Inc.
Headquartered in Atlanta, PRIMEDIA Inc.(NYSE: PRM) --
http://www.primedia.com/-- through its Consumer Source Inc.
operation, is a provider of advertising-supported consumer guides
for the apartment and new home industries. Consumer Source
publishes and distributes more than 38 million guides such as
Apartment Guide and New Home Guide to approximately 60,000 U.S.
locations each year through its proprietary distribution network,
DistribuTech. The company also distributes category-specific
content on its leading websites, including ApartmentGuide.com,
NewHomeGuide.com and Rentals.com, a comprehensive single unit real
estate rental site.
At June 30, 2008, the company's consolidated balance sheet showed
$255.6 million in total assets and $390.5 million in total
liabilities, resulting in a roughly $134.8 million stockholders'
deficit.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $50.9 million in total current
assets available to pay $63.2 million in total current
liabilities.
Net income decreased $3.7 million to $1.9 million compared to
second quarter 2007, due to the second quarter 2007 gain on the
sale of Channel One, part of the company's Education segment,
partially offset by a $24.1 million reduction in interest expense
as a result of the company's lower debt level.
Total net revenue decreased 2.2% to $76.8 million compared to
second quarter 2007, reflecting a 2.1% increase in Apartments,
offset by a 16.4% decline in New Homes and a 5.0% decline in
DistribuTech.
PRO-ACTIVE COMM: Hearing at Bankruptcy Court Set for November
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona has set a
hearing for Pro-Active Communications Fresno, LLC's Chapter 11
case in November, Rick Bentley at The Fresno Bee reports, citing
Joe Miller, the Vice President of Signal Development for EMF.
Accoding to The Fresno Bee, Pro-active Communications' CEO Jerry
Clifton filed for bankruptcy because the business owes more than
$1.7 million to Educational Media Foundation.
Mr. Clifton bought a Kingsburg radio station from Rocklin-based
EMF in 2006 for $2.7 million. Mr. Clifton owes more than
$1.7 million plus penalties on the purchase, The Fresno Bee
states, citing Mr. Miller. Mr. Clifton, says the report, bought
the radio station as an investment to go along with his two
Washington-based radio stations. The report states that at first,
that station played Christian music, but Mr. Clifton changed the
format to a collection of suggestive songs and some groaning,
calling it "Porn Radio." Because of this, Mr. Clifton got
international attention, but the station didn't get enough
listeners or ad revenue, says the report.
The Fresno Bee relates that MackNificent Broadcasting's Greg Mack
agreed to purchase the radio station in 2007 for
$4.6 million. According to The Fresno Bee, the deal includied a
$200,000 good-faith payment, which Mr. Clifton would keep even if
the deal fails. The report says that a lease management agreement
was made, allowing Mr. Mack to operate the station for one year
while he paid Mr. Clifton. The report states that Mr. Clifton
claimed that Mr. Mack didn't live up to that agreement.
The Fresno Bee quoted Mr. Clifton as saying, "He paid some of the
bills. But not all of them. We trusted him. He was supposed to
pay all of the Pro-active bills and a fee to me. I never saw $1."
Mr. Mack, says The Fresno Bee, denied ever failing to pay his
bills.
Citing Mr. Mack, The Fresno Bee states that the deal collapsed
because he could not get financing, due to a tolling agreement,
which the Federal Communications Commission implements when a
complaint has been filed to make sure any fines imposed for
improper actions will be paid. The complaint, according to the
report, was filed over the song "Grind On Me" when the radio
station was KSXE and under Mr. Clifton's operation.
The tolling agreement wasn't a "factor," The Fresno Bee states,
citing Mr. Clifton. Accoding to The Fresno Bee, Mr. Clifton said
that the FCC lets multiple radio station owners to move the
tolling agreement to another of their stations. The report says
that Mr. Clifton agreed to move it to his Spokane radio station
KAZZ.
The Fresno Bee states that KAZZ and KKQB -- Mr. Clifton's other
Spokane radio station -- went off air in September, and he has one
year to put them back on the air.
Mr. Clifton said that he agreed with Mr. Mack at the end of the
one-year deal to end their agreement, and Mr. Clifton started
operating KVPW again on Oct. 1, The Fresno Bee reports.
"It is hard to get a loan right now. So we are trying to raise
money the old-fashioned way. We are selling advertising. So far,
this month is doing pretty well since we are working with a
skeleton crew," The Fresno Bee quoted Mr. Clifton as saying.
About Pro-Active Communications
Scottsdale, Arizona-based Pro-Active Communications Fresno, LLC,
owns and operates a radio station. The company filed for Chapter
11 protection on July 3, 2008 (Bankr. D. Ariz. Case No. 08-08206).
Joel F. Newell, Esq., at Carmichael & Powell, P.C., represents the
company in its restructuring effort. The company listed assets
less than $50,000 and debts of $1 million to $10 million.
PSI CORP: July 31 Balance Sheet Upside-down by $3.3 Million
-----------------------------------------------------------
PSI Corporation balance sheet at July 31, 2008, showed $1,229,441
in total assets and $4,622,243 in total liabilities resulting in a
$3,392,802 stockholders' deficit.
The company's balance sheet also showed strained liquidity with
$625,946 in total current asset available to pay $1,319,303 in
total current liabilities.
The company reported $324,825 net loss on revenue of $186,530 for
the three months ended July 31, 2008, compared to $664,879 net
loss on revenue of $181,895 for the same period a year earlier.
Going Concern Doubt
On. Oct. 23, 2008, Seligson & Giannattasio LLP expressed
substantial doubt about the company's ability to continue as a
going concern after auditing the company's financial statement
for the years ended Oct. 31, 2007, and 2006. The firm pointed
out that the company as incurred significant losses since
inception and has relied on non-operational sources of financing
to fund operations.
A full-text copy of the company's regulatory filing is available
for free at http://ResearchArchives.com/t/s?345e
About PSI Corp.
Based in Linfield, Pa., PSI Corp. (Pink Sheets: PSCP) provides
interactive customer communications systems and applications that
support the targeted marketing programs at point-of-purchase
service and information. The company has two vertical products:
full motion video digital signage and full service Cash Express
Kiosks/ATM.
RALI: Moody's Cuts Ratings on 121 Tranches from 17 Transactions
---------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 121
tranches from 17 transactions issued by RALI Series. In addition,
3 tranches continue to remain on review for possible downgrade.
The collateral backing these transactions consists primarily of
first-lien, adjustable-rate, Alt-A mortgage loans.
Ratings were downgraded, in general, based on higher than
anticipated rates of delinquency, foreclosure, and REO in the
underlying collateral relative to credit enhancement levels.
Also, for certain seasoned deals, step-down, or the possibility
thereof, is likely to cause further erosion of credit support from
subordination.
The actions are a result of Moody's on-going review process.
Complete rating actions are:
Issuer: RALI Series 2003-QA1 Trust
-- Cl. M-1, Downgraded to A1 from Aa2
-- Cl. M-2, Downgraded to Baa1 from A2
Issuer: RALI Series 2004-QA2 Trust
-- Cl. A-I, Downgraded to Aa1 from Aaa
-- Cl. A-II, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to A3 from Aa2
-- Cl. M-2, Downgraded to Ba2 from A2
-- Cl. M-3, Downgraded to B3 from Ba1
Issuer: RALI Series 2004-QA3 Trust
-- Cl. M-3, Downgraded to Baa3 from Baa2
Issuer: RALI Series 2004-QA4 Trust
-- Cl. M-3, Downgraded to Ba2 from Baa2
-- Cl. B-1, Downgraded to Caa3 from Ba2
Issuer: RALI Series 2004-QA5 Trust
-- Cl. M-2, Downgraded to Baa1 from A2
-- Cl. M-3, Downgraded to Caa1 from Baa2
Issuer: RALI Series 2004-QA6 Trust
-- Cl. CB-I, Downgraded to Aa2 from Aaa
-- Cl. CB-II, Downgraded to Aa2 from Aaa
-- Cl. NB-I, Downgraded to Aa2 from Aaa
-- Cl. NB-II, Downgraded to Aa2 from Aaa
-- Cl. NB-III-1, Downgraded to Aa1 from Aaa
-- Cl. NB-III-2, Downgraded to Aa3 from Aa1
-- Cl. NB-III-3, Downgraded to Aa2 from Aaa
-- Cl. NB-IV, Downgraded to Aa2 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa2
-- Cl. M-2, Downgraded to B1 from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA1 Trust
-- Cl. A-2, Downgraded to Aa3 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa2
-- Cl. M-2, Downgraded to Ba2 from A2
-- Cl. M-3, Downgraded to Caa3 from Baa2
Issuer: RALI Series 2005-QA10 Trust
-- Cl. A-II-1, Downgraded to Aa2 from Aaa
-- Cl. A-II-2, Downgraded to Ba2 from Aaa
-- Cl. A-III-1, Downgraded to Aa2 from Aaa
-- Cl. A-III-2, Downgraded to Ba2 from Aaa
-- Cl. A-IV-1, Downgraded to Aa2 from Aaa
-- Cl. A-IV-2, Downgraded to Ba2 from Aaa
-- Cl. M-1, Downgraded to Caa1 from A2
-- Cl. M-2, Downgraded to Ca from Ba3
-- Cl. M-3, Downgraded to Ca from B3
Issuer: RALI Series 2005-QA12 Trust
-- Cl. CB-I, Downgraded to Ba2 from Aaa
-- Cl. CB-III, Downgraded to Ba2 from Aaa
-- Cl. NB-II, Downgraded to Baa3 from Aaa
-- Cl. NB-IV, Downgraded to Ba2 from Aaa
-- Cl. NB-V, Downgraded to Ba2 from Aaa
-- Cl. M-1, Downgraded to Caa1 from Baa1
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B3
Issuer: RALI Series 2005-QA2 Trust
-- Cl. A1-I, Downgraded to Aa3 from Aaa
-- Cl. A1-II, Downgraded to Aa3 from Aaa
-- Cl. A2-I, Downgraded to A1 from Aa1
-- Cl. A2-II, Downgraded to A1 from Aa1
-- Cl. CB-I, Downgraded to Aa3 from Aaa
-- Cl. CB-II, Downgraded to Aa2 from Aaa
-- Cl. NB-I, Downgraded to Aa3 from Aaa
-- Cl. NB-II, Downgraded to Aa2 from Aaa
-- Cl. M-1, Downgraded to Baa2 from Aa2
-- Cl. M-2, Downgraded to Caa1 from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA3 Trust
-- Cl. CB-I, Downgraded to Baa1 from Aaa
-- Cl. CB-II, Downgraded to Baa1 from Aaa
-- Cl. CB-III, Downgraded to Baa1 from Aaa
-- Cl. CB-IV, Downgraded to A3 from Aaa
-- Cl. NB-I, Downgraded to Baa1 from Aaa
-- Cl. NB-II, Downgraded to Baa1 from Aaa
-- Cl. NB-III, Downgraded to Baa1 from Aaa
-- Cl. NB-IV, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to B3 from Aa2; Placed Under Review for
further Possible Downgrade
-- Cl. M-2, Downgraded to Ca from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA4 Trust
-- Cl. A-I-1, Downgraded to Aa1 from Aaa
-- Cl. A-I-2, Downgraded to A3 from Aaa
-- Cl. A-II-1, Downgraded to Aa1 from Aaa
-- Cl. A-II-2, Downgraded to A3 from Aa1
-- Cl. A-III-1, Downgraded to Aa2 from Aaa
-- Cl. A-III-2, Downgraded to A3 from Aa1
-- Cl. A-IV-1, Downgraded to Aa2 from Aaa
-- Cl. A-IV-2, Downgraded to A3 from Aa1
-- Cl. A-V, Downgraded to A3 from Aaa
-- Cl. M-1, Downgraded to Ba2 from Aa2
-- Cl. M-2, Downgraded to Ca from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA5 Trust
-- Cl. M-1, Downgraded to Baa2 from Aa2
-- Cl. M-2, Downgraded to Caa3 from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA6 Trust
-- Cl. A-III-1, Downgraded to A3 from Aaa
-- Cl. A-III-2, Downgraded to A3 from Aaa
-- Cl. CB-I, Downgraded to A3 from Aaa
-- Cl. CB-II, Downgraded to A3 from Aaa
-- Cl. NB-II-1, Downgraded to Aa2 from Aaa
-- Cl. NB-II-2, Downgraded to Baa1 from Aaa
-- Cl. NB-II-3, Downgraded to A3 from Aaa
-- Cl. M-1, Downgraded to B3 from Aa2; Placed Under Review for
further Possible Downgrade
-- Cl. M-2, Downgraded to Ca from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA7 Trust
-- Cl. A-I, Downgraded to A3 from Aaa
-- Cl. A-II-1, Downgraded to A3 from Aaa
-- Cl. A-II-2, Downgraded to Aa2 from Aaa
-- Cl. A-II-3, Downgraded to Baa1 from Aa1
-- Cl. A-II-IO, Downgraded to Aa2 from Aaa
-- Cl. M-1, Downgraded to B3 from Aa2; Placed Under Review for
further Possible Downgrade
-- Cl. M-2, Downgraded to Ca from A2
-- Cl. M-3, Downgraded to Ca from Baa2
Issuer: RALI Series 2005-QA8 Trust
-- Cl. CB-I-1, Downgraded to Aa2 from Aaa
-- Cl. CB-I-2, Downgraded to A2 from Aaa
-- Cl. CB-II-1, Downgraded to Aa2 from Aaa
-- Cl. CB-II-2, Downgraded to A2 from Aaa
-- Cl. CB-III, Downgraded to Aa3 from Aaa
-- Cl. NB-I, Downgraded to A1 from Aaa
-- Cl. NB-II, Downgraded to A1 from Aaa
-- Cl. NB-III, Downgraded to Aa3 from Aaa
-- Cl. M-1, Downgraded to B2 from A1
-- Cl. M-2, Downgraded to Caa3 from Ba1
-- Cl. M-3, Downgraded to Ca from B1
Issuer: RALI Series 2005-QA9 Trust
-- Cl. CB-I-1, Downgraded to Aa2 from Aaa
-- Cl. CB-I-2, Downgraded to B1 from Aaa
-- Cl. CB-III, Downgraded to Ba2 from Aaa
-- Cl. NB-II-1, Downgraded to Aa2 from Aaa
-- Cl. NB-II-2, Downgraded to B1 from Aaa
-- Cl. NB-IV-1, Downgraded to Aa2 from Aaa
-- Cl. NB-IV-2, Downgraded to B1 from Aaa
-- Cl. M-1, Downgraded to Caa2 from Baa1
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to Ca from B3
-- Cl. B-1, Downgraded to C from Ca
RESERVOIR FUNDING: S&P Chips Ratings on 72 Tranches from 20 CDOs
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 72
tranches from 20 U.S. cash flow and hybrid collateralized debt
obligation transactions. S&P removed 26 of the lowered ratings
from CreditWatch with negative implications. At the same time,
S&P placed two ratings on Reservoir Funding Ltd. on CreditWatch
with negative implications. In addition, S&P withdrew its rating
on one tranche from Saybrook Point CBO II Ltd. The ratings on 46
of the downgraded tranches are on CreditWatch with negative
implications, indicating a significant likelihood of further
downgrades.
The CreditWatch placements primarily affect transactions for which
a significant portion of the collateral assets currently have
ratings on CreditWatch with negative implications or have
significant exposure to assets rated in the 'CCC' category.
The 72 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of $13.341 billion. Eleven of the 20 affected
transactions are mezzanine structured finance CDOs of asset-backed
securities, which are collateralized in large part by mezzanine
tranches of residential mortgage-backed securities and other SF
securities. Seven of the 20 affected transactions are high-grade
SF CDOs of ABS that were collateralized at origination primarily
by 'AAA' through 'A' rated tranches of RMBS and other SF
securities. The other two transactions are CDOs of CDOs that were
collateralized at origination primarily by notes from other CDOs,
as well as by tranches from RMBS and other SF transactions. The
CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on U.S. subprime
RMBS.
In addition, Standard & Poor's reviewed the ratings assigned to C-
BASS CBO IX Ltd., LNR CDO 2003-1 Ltd., N-Star Real Estate CDO VII
Ltd., and TIAA Real Estate CDO 2002-1 Ltd. and has left the
ratings at their current levels based on the current credit
support available to the tranches.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
has lowered its ratings on 3,996 tranches from 889 U.S. cash flow,
hybrid, and synthetic CDO transactions as a result of stress in
the U.S. residential mortgage market and credit deterioration of
U.S. RMBS. In addition, 1,134 ratings from 445 transactions are
currently on CreditWatch with negative implications for the
same reasons. In all, S&P has downgraded $477.838 billion of CDO
issuance. Additionally, S&P's ratings on $11.744 billion of
securities have not been lowered but are currently on CreditWatch
with negative implications, indicating a high likelihood of future
downgrades.
Rating Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
Bayberry Funding Ltd II CCC-/Watch Neg BBB+/Watch
Neg
Bayberry Funding Ltd III CC BB+/Watch
Neg
Bayberry Funding Ltd IV CC B+/Watch Neg
Bayberry Funding Ltd V CC CCC+/Watch
Neg
Bernoulli High Grade A-1A BB+/Watch Neg AA+
CDO II
Broadwick Funding Ltd A-1b CC BB-/Watch
Neg
Broadwick Funding Ltd A-2 CC BB-/Watch
Neg
Broadwick Funding Ltd B CC CCC-/Watch
Neg
Centre Square CDO Ltd A-1 CC CCC/Watch
Neg
Charles River CDO I, Ltd. A-1A BB+/Watch Neg BBB/Watch
Neg
Charles River CDO I, Ltd. A-1B BB+/Watch Neg BBB/Watch
Neg
Charles River CDO I, Ltd. A-2F CCC-/Watch Neg CCC/Watch
Neg
Charles River CDO I, Ltd. A-2V CCC-/Watch Neg CCC/Watch
Neg
Davis Square Funding II A-1MM-a A-1+/AA/WatchNeg A-
1+/AA+/WatchNeg
Davis Square Funding II A-1LT-a AA/Watch Neg AA+/Watch
Neg
Davis Square Funding II A-1LT-b AA/Watch Neg AA+/Watch
Neg
Davis Square Funding II A-1LT-c AA/Watch Neg AA+/Watch
Neg
Davis Square Funding II A-1LT-d AA/Watch Neg AA+/Watch
Neg
Davis Square Funding II A-1LT-e AA/Watch Neg AA+/Watch
Neg
Davis Square Funding II A-1LT-f AA/Watch Neg AA+/Watch
Neg
Davis Square Funding III A-1LT-a AA-/Watch Neg AA/Watch Neg
Davis Square Funding III A-1LT-b-1 AA-/Watch Neg AA/Watch Neg
Davis Square Funding III A-2 B/Watch Neg A-/Watch Neg
Davis Square Funding III B CCC/Watch Neg B-/Watch Neg
Duke Funding HighGrade III A-1A BBB-/Watch Neg A+/Watch Neg
Duke Funding HighGrade III A-1B1 BBB-/Watch Neg A+/Watch Neg
Duke Funding HighGrade III A-1B2 BBB-/Watch Neg A+/Watch Neg
Duke Funding HighGrade III A-2 B-/Watch Neg BBB-/Watch
Neg
Duke Funding HighGrade III B-1 CCC-/Watch Neg BB+/Watch
Neg
Duke Funding HighGrade III B-2 CCC-/Watch Neg BB+/Watch
Neg
Duke Funding HighGrade III C-1 CC B/Watch Neg
Duke Funding HighGrade III C-2 CC CCC-/Watch
Neg
E*Trade ABS CDO IV, Ltd. A-1A CC B-/Watch Neg
E*Trade ABS CDO IV, Ltd. A-1B-1 CCC-/Watch Neg BBB-/Watch
Neg
E*Trade ABS CDO IV, Ltd. A-1B-2 CC B-/Watch Neg
E*Trade ABS CDO IV, Ltd. A-2 CC CCC-/Watch
Neg
Halcyon Securitized A-1a CC BBB-/Watch
Neg
Products Investors
ABS CDO II Ltd
Halcyon Securitized A-1b CC B-/Watch Neg
Products Investors
ABS CDO II Ltd
Ischus CDO II Ltd A-1A B-/Watch Neg AA-/Watch
Neg
Ischus CDO II Ltd A-1B B-/Watch Neg AA-/Watch
Neg
Ischus CDO II Ltd A-2 CC BBB+/Watch
Neg
Ischus CDO II Ltd B CC B/Watch Neg
Ischus CDO II Ltd C CC CCC-/Watch
Neg
Jupiter High-Grade CDO III A-1NV A/Watch Neg AAA/Watch
Neg
Jupiter High-Grade CDO III A-1VA A/Watch Neg AAA/Watch
Neg
Jupiter High-Grade CDO III A-1VB A/Watch Neg AAA/Watch
Neg
Jupiter High-Grade CDO III A-2 BB-/Watch Neg A+/Watch Neg
Jupiter High-Grade CDO III A-2B BB-/Watch Neg A+/Watch Neg
Jupiter High-Grade CDO III B CCC-/Watch Neg BB/Watch Neg
Jupiter High-Grade CDO III C CC CCC/Watch
Neg
Marathon Structured A-1 B/Watch Neg A/Watch Neg
Funding I
Millerton ABS CDO Ltd A-2 BBB/Watch Neg AAA/Watch
Neg
Millerton ABS CDO Ltd B CCC/Watch Neg A-/Watch Neg
Millerton ABS CDO Ltd C CC BB/Watch Neg
Reservoir Funding Ltd A-1-NV AAA/Watch Neg AAA
Reservoir Funding Ltd A-1-V AAA/Watch Neg AAA
Reservoir Funding Ltd A-2 B/Watch Neg A+/Watch Neg
Reservoir Funding Ltd B CC CCC+/Watch
Neg
Reservoir Funding Ltd C CC CCC-/Watch
Neg
Revelstoke CDO I Limited A-2 A+/Watch Neg AAA
Revelstoke CDO I Limited A-3 CCC-/Watch Neg A/Watch Neg
Saybrook Point CBO II A A+/Watch Neg AAA/Watch
Neg
Saybrook Point CBO II B-1 BB+/Watch Neg A+/Watch Neg
Saybrook Point CBO II B-2 BB+/Watch Neg A+/Watch Neg
Saybrook Point CBO II C-1 CCC-/Watch Neg BBB/Watch
Neg
Saybrook Point CBO II C-2 CCC-/Watch Neg BBB/Watch
Neg
Saybrook Point CBO II PrefShare NR BB+/Watch
Neg
Squared CDO 2007-1, Ltd. A-1 CC CCC-/Watch
Neg
Tourmaline CDO III Ltd A-1a CCC-/Watch Neg B-/Watch Neg
Tourmaline CDO III Ltd A-1b CC B-/Watch Neg
Tourmaline CDO III Ltd A-2 FLT CC CCC+/Watch
Neg
Tourmaline CDO III Ltd A-2 FXD CC CCC+/Watch
Neg
Tourmaline CDO III Ltd B-1 CC CCC-/Watch
Neg
Vermeer Funding Ltd B A+/Watch Neg AA
Vermeer Funding Ltd C CCC-/Watch Neg B
Other Ratings Reviewed
Transaction Class To
----------- ----- --
Bernoulli High Grade CDO II A-1B CC
Bernoulli High Grade CDO II B CC
Bernoulli High Grade CDO II C CC
Bernoulli High Grade CDO II D CC
Bernoulli High Grade CDO II E CC
Bernoulli High Grade CDO II F CC
Bernoulli High Grade CDO II G CC
Broadwick Funding Ltd S AAA
Broadwick Funding Ltd C CC
Broadwick Funding Ltd D CC
C-BASS CBO IX Ltd. A-1 AAA
C-BASS CBO IX Ltd. A-2 AAA
C-BASS CBO IX Ltd. B AAA
C-BASS CBO IX Ltd. C AA+
C-BASS CBO IX Ltd. D A+
Centre Square CDO Ltd A-2A CC
Centre Square CDO Ltd A-2B CC
Centre Square CDO Ltd A-3 CC
Centre Square CDO Ltd B CC
Centre Square CDO Ltd C CC
Centre Square CDO Ltd D CC
Charles River CDO I, Ltd. B-F CC
Charles River CDO I, Ltd. B-V CC
Charles River CDO I, Ltd. C CC
Charles River CDO I, Ltd. Comb Sec CC
Davis Square Funding II A-1MT-a AA-/Watch Pos
Davis Square Funding II A-1MT-b AA-/Watch Pos
Davis Square Funding II A-1MT-d AA-/Watch Pos
Davis Square Funding II A-1MT-e AA-/Watch Pos
Duke Funding High Grade III D CC
Duke Funding High Grade III Sub Nts CC
E*Trade ABS CDO IV, Ltd. B CC
E*Trade ABS CDO IV, Ltd. C CC
E*Trade ABS CDO IV, Ltd. D CC
E*Trade ABS CDO IV, Ltd. Pref Shrs CC
Halcyon Securitized Products A-2 CC
Investors ABS CDO II Ltd
Halcyon Securitized Products B CC
Investors ABS CDO II Ltd
Halcyon Securitized Products C CC
Investors ABS CDO II Ltd
Halcyon Securitized Products D-1 CC
Investors ABS CDO II Ltd
Halcyon Securitized Products D-2 CC
Investors ABS CDO II Ltd
Halcyon Securitized Products E CC
Investors ABS CDO II Ltd
Ischus CDO II Ltd D CC
LNR CDO 2003-1 Ltd. A AAA
LNR CDO 2003-1 Ltd. B AAA
LNR CDO 2003-1 Ltd. C-FL AA
LNR CDO 2003-1 Ltd. C-FX AA
LNR CDO 2003-1 Ltd. D-FL AA-
LNR CDO 2003-1 Ltd. D-FX AA-
LNR CDO 2003-1 Ltd. E-FL A
LNR CDO 2003-1 Ltd. E-FX A
LNR CDO 2003-1 Ltd. F-FL BBB+
LNR CDO 2003-1 Ltd. F-FX BBB+
LNR CDO 2003-1 Ltd. G BBB
LNR CDO 2003-1 Ltd. H BB+
LNR CDO 2003-1 Ltd. J B+
Millerton ABS CDO Ltd A-1 AAA
N-Star Real Estate CDO VII A-1 AAA
N-Star Real Estate CDO VII A-2 AAA
N-Star Real Estate CDO VII A-3 AAA
N-Star Real Estate CDO VII B AA
N-Star Real Estate CDO VII C A
N-Star Real Estate CDO VII D-FL BBB
N-Star Real Estate CDO VII D-FX BBB
N-Star Real Estate CDO VII E BB
Reservoir Funding Ltd D CC
Revelstoke CDO I Limited A-1 AAA
Revelstoke CDO I Limited B CC
Squared CDO 2007-1, Ltd. A-2a CC
Squared CDO 2007-1, Ltd. A-2b CC
Squared CDO 2007-1, Ltd. B CC
Squared CDO 2007-1, Ltd. C CC
Squared CDO 2007-1, Ltd. Comp Nts AAA
Squared CDO 2007-1, Ltd. D CC
Squared CDO 2007-1, Ltd. E CC
TIAA Real Estate CDO 2002-1 I AAA
TIAA Real Estate CDO 2002-1 II-FL AA
TIAA Real Estate CDO 2002-1 II-FX AA
TIAA Real Estate CDO 2002-1 III BBB+
TIAA Real Estate CDO 2002-1 IV BB+
Tourmaline CDO III Ltd B-2 CC
Tourmaline CDO III Ltd C CC
Tourmaline CDO III Ltd Combo Nts CC
Tourmaline CDO III Ltd D-1 CC
Tourmaline CDO III Ltd D-2 FLT CC
Tourmaline CDO III Ltd D-2 HYB CC
Tourmaline CDO III Ltd D-3 CC
Tourmaline CDO III Ltd E CC
Tourmaline CDO III Ltd PrncPtdNts AA-
Vermeer Funding Ltd A-1 AAA
Vermeer Funding Ltd A-2 AAA
ROME FINANCE: Files for Chapter 11; Fraud Case Pending
------------------------------------------------------
Tavia D. Green at The Leaf-Chronicle reports that when Rome
Finance Co., Inc., filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the Northern District of California, it was
facing a lawsuit by the Tennessee attorney general for alleged
fraud.
The Middle Tennessee Better Business Bureau reported in September
2005 that the attorney general filed a civil lawsuit and temporary
restraining order against Rome Finance, Britlee Inc., and Stuart
Jordan over alleged breaches of the Tennessee Consumer Protection
Act and the Tennessee Credit Services Business Act. Court
documents say that a large number of the clients were Fort
Campbell soldiers. Rome Finance worked with Britlee, says The
Leaf-Chronicle.
The Leaf-Chronicle relates that the fraud case is pending.
Montgomery County Judge Ross H. Hicks, says The Leaf-Chronicle,
hasn't ruled on the case. According to the report, the judge
ordered during a hearing in September 2008 Rome Finance's owner,
Ronald M. Wilson, owner of Rome Finance, to put $1.2 million in an
escrow account, because that is the amount Rome Finance collected
from Tennessee clients or Tennessee contracts after the temporary
restraining order was imposed.
According to The Leaf-Chronicle, Rome Finance's bankruptcy
counsel, William C. Lewis, Esq., at the Law Offices of William C.
Lewis filed a complaint for declaratory and injunctive relief,
temporary restraining order, and preliminary injunction. The
Leaf-Chronicle states that a court hearing was set for Oct. 20,
but court clerks said it was postponed.
Concord, California-based Rome Finance Co., Inc. --
https://www.romefinance.com/ -- offers financial services. The
company filed for Chapter 11 protection on Oct. 15, 2008 (Bankr.
N. D. Calif. Case No. 08-45902). The company listed assets of
$50 million to $100 million and debts of $50 million to
$100 million.
ROUSE COMPANY: Moody's Cuts Sr. Unsecured Debt Rtng to B3 from Ba3
------------------------------------------------------------------
Moody's Investors Service has downgraded the ratings on General
Growth Properties, Inc., certain of its subsidiaries and The Rouse
Company LP (to B3 from Ba3 senior secured bank debt; to B3 from
Ba3 senior unsecured debt). The ratings remain on review for
further possible downgrade. The rating action reflects General
Growth's continued strained financial flexibility, and substantial
uncertainty of the REIT's liquidity position and credit profile
given significant near term refinancing and development funding
needs, coupled with expected earnings pressure due to a likely
protracted downturn in the economy.
Recently announced management changes are also worrisome as
Moody's believes this adds increasing uncertainty to the strategic
vision for the REIT. The earnings pressures have eroded General
Growth's credit metrics and the cushion for both the secured debt
and interest coverage covenants for the Rouse debt. Furthermore,
given the current capital constrained environment, Moody's
believes that the company's ability to pay off or refinance its
upcoming mortgage debt of $1.1 billion due at the end of next
month is very constrained.
The company has been exploring several alternatives to meet their
urgent capital needs, which includes working on extending the
maturity date of their mortgage loans due in November and also
marketing for sale their premier Las Vegas malls. Moody's notes
that the shedding of a portfolio which includes some of General
Growth's most profitable assets will likely compromise future
earnings power, portfolio quality, and credit metrics.
Moody's review will continue to focus on the REIT's ability to
manage through its substantial funding needs in the near term, as
well as its ultimate capital structure, asset composition, and
earnings strength and stability. The B3 rating reflects the
company's current credit metrics and its existing portfolio. A
further downgrade would likely reflect any refinancing missteps,
any weakening of current credit metrics and an acute reversal in
earnings strength or stability, or a breach in bond covenants.
A return to a stable outlook would be contingent upon the REIT's
ability to successfully refinance or extend on a long term basis
its near term debt maturities, maintain good operating performance
at its retail centers, preserve current credit metrics on a
consolidated basis, and comply with bond covenants.
These ratings were downgraded and placed under review down for
possible downgrade:
* GGP Limited Partnership - Senior secured bank debt to B3 from
Ba3, and senior unsecured debt shelf to (P)B3 from (P)Ba3.
* General Growth Properties, Inc. - Senior secured bank debt to
B3 from Ba3, and preferred stock shelf to (P)Caa2 from (P)B2.
* The Rouse Company LP - Senior unsecured debt to B3 from Ba3.
General Growth Properties, Inc. [NYSE: GGP] is headquartered in
Chicago, Illinois, and is one of the largest owners and operators
of regional malls in the United States. The REIT reported assets
of $29.5 billion, and equity of $1.9 billion, at June 30, 2008.
SHUMATE INDUSTRIES: Intervale Capital Discloses 10% Equity Stake
----------------------------------------------------------------
Intervale Capital, LLC, Curtis W. Huff and Charles Cherington
disclosed in a Securities and Exchange Commission filing that they
may be deemed to beneficially own 2,443,269 shares of Shumate
Industries Inc.'s common stock, representing 10% of the shares
issued and outstanding.
About Shumate Industries
Based in Conroe, Texas, Shumate Industries Inc. (OTC BB: SHMT)
-- http://www.shumateinc.com/-- is an energy field services
company. The company operates through two wholly owned
subsidiaries, Shumate Machine Works, a contract machining and
manufacturing division, and Hemiwedge Valve Corporation, a
proprietary new valve technology that targets mid-stream process
and flow control markets with its Hemiwedge(R) Cartridge valve
product line, sub-sea via a pending licensing deal for
Hemiwedge(R) sub-sea high pressure valve product line, and
Hemiwedge(R) down-hole valves under development for drilling
applications.
Going Concern Doubt
As reported in the Troubled Company Reporter on June 13, 2008,
Houston-based Malone & Bailey, PC, expressed substantial doubt on
Shumate Industries Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006. The auditing firm stated
that Shumate requires significant amount of cash in its operations
and does not have sufficient cash to fund its operations for the
next 12 months.
As of June 30, 2008, Shumate Industries Inc.'s consolidated
balance sheet showed $4.9 million in total assets and
$12.4 million in total liabilities, resulting in a $7.4 million in
stockholders' deficit.
Shumate incurred recurring losses from operations of $3,107,251
for the six months ended June 30, 2008, and has an accumulated
deficit of $30,550,139. These conditions, the Company said in an
August 2008 regulatory filing, raise substantial doubt as to its
ability to continue as a going concern.
Shumate has sought recapitalization with debt and equity during
2008, however there can be no assurance that it will successfully
recapitalize. In addition, management is trying to continue to
increase Shumate's revenues and improve its results of operations
to a level of profitability including revenues and cash flow from
its Hemiwedge Valve Corporation subsidiary. New sales
representative agreements have been executed during 2008 to assist
in the sales and marketing efforts to improve our results of
operations.
Shumate believes that it will not be able to fund its operations,
working capital requirements, and debt service requirements
through fiscal year 2008 through cash flows generated by
operations alone. The Company said management will seek to raise
additional capital in fiscal year 2008, and possibly beyond 2008
if Shumate's results of operations do not continue to improve or
if the need otherwise arises.
SMURFIT-STONE: Fitch Cuts Preferred Stock Rating to 'CCC/RR6'
-------------------------------------------------------------
Fitch Ratings has lowered the ratings of Smurfit-Stone Container
Corporation as:
-- Issuer Default Rating to 'B' from 'B+';
-- Secured bank debt to 'BB/RR1' from 'BB+/RR1';
-- Senior unsecured debt to 'B/RR4' from 'B+/RR4';
-- Preferred stock to 'CCC+/RR6' from 'B-/RR6'.
The Rating Outlook remains Negative.
Cost inflation continues to rob profits from the benefits of
SSCC's transformation plan and the bottom line impacts of price
initiatives designed to recapture inflation. This comes at an
unfortunate time when the company is finishing paying for
machinery upgrades and two new highly efficient box plants. Free
Cash Flow of -$170 million for the first three quarters has grown
slightly worse than the -$134 million experienced last year, and
this has forced SSCC back to borrowing money that was repaid last
year, $168 million so far.
Headwinds are mixed. SSCC's box shipments have been growing as
the year has progressed, contrary to industry-wide data which
suggests a -2% contraction for the year, and the company should
get a break on cost inflation in upcoming quarters. Recycle fiber
costs have plummeted as China has scaled back production; energy
and freight prices have retrenched; and the drop in pulp prices
and concurrent growth in inventories suggests lower pulpwood costs
next year. On the flip side industry containerboard exports (the
North American industry's safety valve) are likely to weaken due
to a slowing global demand which means more capacity needs to find
a home. This could put downward pressure on containerboard and
box prices unless additional capacity is shut.
Even though SSCC's fourth quarter results are projected to best
this past third quarter, leverage metrics will still be close to
7.0 times debt/EBITDA at the exit of this year, 6.8x at the end of
the third quarter. SSCC will be cutting capital expenditures with
immediate effect to preserve liquidity which was $178 million at
the end of this past third quarter. A further deterioration in
operating and EBITDA margins would presage another negative rating
revision.
SSCC is a key North American producer in the corrugated box
markets with 16 paper mills and 118 corrugated container plants in
North America. The company produces 7 million tons annually of
containerboard and sells more than 70 billion square feet of boxes
to home appliance, beverage, food, pharmaceutical, computer,
machinery and furniture manufacturers.
SOLOMON TECHNOLOGIES: Issues 23.7MM Shares to 4 Debenture Holders
-----------------------------------------------------------------
Solomon Technologies Inc. disclosed in a Securities and Exchange
Commission filing that on Oct. 22, 2008, it issued 23,776,225
shares of Common Stock to four holders of its Variable Rate Self-
Liquidating Senior Secured Convertible Debentures due April 19 and
Sept. 1, 2009.
These shares of Common Stock were issued pursuant to the pre-
redemption provisions of the Debentures.
About Solomon Technologies
Headquartered in Tarpon Springs, Florida, Solomon Technologies
Inc. (OTC BB: SOLM.OB) -- http://www.solomontechnologies.com/--
through its Motive Power and Power Electronics divisions,
develops, licenses, manufactures and sells precision electric
power drive systems.
Solomon Technologies Inc.'s consolidated balance sheet at
June 30, 2008, showed $9.71 million in total assets and $14.37
million in total liabilities, resulting in a $4.66 million total
stockholders' deficit. The company also had $58.7 million in
accumulated deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $4.82 million in total current
assets available to pay $14.37 million in total current
liabilities.
* * *
Eisner LLP, in New York, expressed substantial doubt about Solomon
Technologies Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
year ended Dec. 31, 2007. The auditing firm reported that the
company has incurred significant recurring operating losses, has a
working capital deficit and capital deficit, is delinquent in the
payment of payroll taxes and balances to certain employees, and is
in default of certain notes and debentures.
SOLUTIA INC: Profits Slide to $24 Mln in 3rd Qtr 2008
-----------------------------------------------------
Solutia Inc. reported consolidated net income of $24 million from
continuing operations for the third quarter 2008 compared to a net
loss of $134 million for the same period in 2007. Solutia's
results were impacted by certain events affecting comparability
totaling an after-tax loss $159 million in 2007.
After consideration of these special items in 2007, income was
down $1 million from $25 million in the third quarter of 2007 to
$24 million in the third quarter of 2008. This was due to
increased depreciation and amortization expense in the third
quarter of 2008 as a result of increased asset values through the
application of fresh-start accounting and higher non-cash stock
compensation expense.
Solutia reported a 29% increase in net sales and a 48% increase in
Adjusted EBITDA from continuing operations for the third quarter
of 2008, as compared to the same period in 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $4.5 billion, total liabilities of $3.2 billion and
shareholders' equity of $ 1.3 billion.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
manufactures and sells chemical-based materials, which are used in
consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
Solutia's $2.05 billion exit financing facility was funded by
Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P.,
and Deutsche Bank Securities Inc. The exit financing is being
used to pay certain creditors, and for ongoing operations.
(Solutia Bankruptcy News, Issue No. 130; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* * *
Standard & Poor's Ratings Services said its ratings on Solutia
Inc. (B+/Stable/--) will not change as a result of the company's
recent announcement of a public offering of common shares.
SYMPHONY CREDIT: Moody's Trims $19MM Class D Notes Rating to 'B2'
-----------------------------------------------------------------
Moody's Investors Service has (i) placed on review for possible
downgrade its ratings of the Class A Notes, the Class B Notes and
the Class C Notes issued by, and the Loans under the Second Senior
Credit Agreement and the Mezzanine Credit Agreement entered into
by, Symphony Credit Opportunities Fund Ltd. and (ii) downgraded
the Class D Notes issued by Symphony Credit Opportunities Fund
Ltd. and left the rating on review for possible further downgrade.
The rating actions taken are:
Class Description: $364,000,000 Class A Senior Secured Variable
Funding Notes Due 2015
-- Prior Rating: Aaa
-- Prior Rating Date: 2/9/2007
-- Current Rating: Aaa, on review for possible downgrade
Class Description: $8,000,000 Class B Secured Floating Rate Notes
Due 2015
-- Prior Rating: Aa2
-- Prior Rating Date: 2/9/2007
-- Current Rating: Aa2, on review for possible downgrade
Class Description: $10,000,000 Loans under the Second Senior
Credit Agreement
-- Prior Rating: Aa2
-- Prior Rating Date: 2/9/2007
-- Current Rating: Aa2, on review for possible downgrade
Class Description: $5,000,000 Class C Secured Floating Rate Notes
Due 2015
-- Prior Rating: A2
-- Prior Rating Date: 2/9/2007
-- Current Rating: A2, on review for possible downgrade
Class Description: $10,000,000 Loans under the Mezzanine Credit
Agreement
-- Prior Rating: A2
-- Prior Rating Date: 2/9/2007
-- Current Rating: A2, on review for possible downgrade
Class Description: $19,000,000 Class D Secured Floating Rate Notes
Due 2015
-- Prior Rating: Baa2
-- Prior Rating Date: 2/9/2007
-- Current Rating: B2, on review for possible downgrade
Symphony Credit Opportunities Fund Ltd. is a market value
collateralized loan obligation transaction backed primarily by
bank loans.
The rating actions reflect deterioration in the market value of
the underlying collateral pool and the increased volatility and
decreased liquidity in the bank loan market, as well as the
violation of an over-collateralization test on October 24, 2008,
as reported by Symphony Credit Opportunities Fund Ltd.
SYNTAX-BRILLIAN: Court Approves Wilson Sonsini as Counsel
---------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
authorized James S. Feltman, the examiner for the Chapter 11 cases
of Syntax-Brillian Corporation and its debtor-affiliates, to
employ Wilson Sonsini Goodrich & Rosati, P.C., as his counsel.
The Court directed Mr. Feltman to investigate (i) the alleged loss
of value in certain substantial assets from the Debtors' estates
between Sept. 30, 2007, and July 8, 2008, and information about
the decreases; and (ii) preliminary claims, if any, that should be
developed against the Debtors' current former officers and
directors.
The firm is expected to:
a) take all necessary actions to assist the examiner in his
examination;
b) prepare on behalf of the examiner all reports, pleadings,
applications, and other necessary documents in the discharge
of the examiners' duties;
c) assist the examiner in undertaking additional tasks that the
Court may direct; and
d) perform all other necessary legal advices on behalf of the
examiner in connection with Chapter 11 cases.
The firm's professionals and their compensation rates are:
Designations Hourly Rates
------------ ------------
Members $500-$875
Counsel $380-$550
Associates $260-$580
Paraprofessionals $80-$260
To the best of the examiner's knowledge, the firm does not hold
any interest adverse to the Debtors' estate and their creditors,
and is a "disinterested person" as defined in Section 101(14) of
the Bankruptcy Code.
About Syntax-Brillian
Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:
BRLC) -- http://www.syntaxbrillian.com/-- manufactures and
markets LCD HDTVs, digital cameras, and consumer electronics
products including Olevia(TM) brand high-definition widescreen LCD
televisions and Vivitar brand digital still and video cameras.
Syntax-Brillian is the sole shareholder of California-based
Vivitar Corporation.
The company and two of its affiliates -- Syntax-Brillian SPE,
Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection
on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through
08-11409. Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and
John W. Weiss, Esq., at Greenberg Traurig LLP in New York,
represent the Debtors as counsel. Victoria Counihan, Esq., at
Greenburg Traurig LLP in Wilmington, Delaware, is the Debtors'
Delaware counsel. Five members compose the Official Committee of
Unsecured Creditors. Epiq Bankruptcy Solutions, LLC is the
Debtors' balloting, notice, and claims agent.
When the Debtors filed for protection from their creditors, they
listed total assets of $175,714,000 and total debts of
$259,389,000.
TEKNI-PLEX INC: Grant Stock Options to CEO Young and CFO Langley
----------------------------------------------------------------
Tekni-Plex, Inc. disclosed in a Securities and Exchange Commission
filing that on Oct. 22, 2008, its Board of Directors granted Paul
Young, Chief Executive Officer, an option to purchase 122,500
shares of company common stock and granted Robert Larney, Chief
Financial Officer, an option to purchase 43,750 shares of company
common stock.
Each option was granted in accordance with, and subject to the
terms and conditions of, both the Tekni-Plex, Inc. 2008 Stock
Option Plan, which was adopted by the Board of Directors on
Oct. 22, 2008.
2008 Stock Option Plan
The Board of Directors of the company approved and adopted the
Tekni-Plex, Inc. 2008 Stock Option Plan pursuant to which options
to purchase shares of company common stock may be awarded to
employees, directors and eligible consultants of the company.
The aggregate number of shares of company common stock in respect
of which options may be granted under the plan is 350,000. No
option granted under the plan will qualify as an incentive stock
option under Section 422 of the Internal Revenue Code.
The exercise price per share of common stock for each option will
not be less than fair market value of one share of common stock as
determined on the date of grant. Each option grant is subject to
the vesting terms and other provisions provided in an individual
stock option agreement. The plan and any options issued under it
are intended to be exempt from the requirements of Section 409A of
the Internal Revenue Code.
About Tekni-Plex Inc.
Based in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni-
plex.com/ -- manufactures packaging, packaging products and
materials as well as tubing products. The company primarily
serves the food, healthcare and consumer markets. It has built
leadership positions in its core markets, and focuses on
vertically integrated production of highly specialized products.
Tekni-Plex has operations in the United States, Europe, China,
Argentina and Canada.
Tekni-Plex Inc.'s consolidated balance sheet at March 28, 2008,
showed $620.1 million in total assets and $1.05 billion in total
liabilities, resulting in a $427.0 million total stockholders'
deficit.
* * *
As reported in the Troubled company Reporter on Dec. 27, 2007,
Moody's Investors Service downgraded the Corporate Family Ratings
of Tekni-Plex Inc. to Caa3 from Caa1.
TELTRONICS INC: Names Angela Marvin as Chief Financial Officer
--------------------------------------------------------------
Teltronics, Inc., disclosed in a Securities and Exchange
Commission filing that on Oct. 27, 2008, Angela L. Marvin, CPA
joined the company as Vice President of Finance and Chief
Financial Officer.
Ms. Marvin who holds a Bachelors of Science in Accounting from St.
John Fisher College, is a Certified Public Accountant licensed in
the State of New York.
Prior to joining Teltronics, Inc., Ms. Marvin was with JCI Jones
Chemicals, Inc., a privately held manufacturer and distributor of
water treatment chemicals. Ms. Marvin joined JCI Jones Chemicals,
Inc. in 2002 and served as Chief Financial Officer and Treasurer.
Prior to her private industry experience, Ms Marvin was a Senior
Auditor with Deloitte.
About Teltronics Inc.
Headquartered in Sarasota, Florida, Teltronics Inc. (OTC BB:
TELT) -- http://www.teltronics.com/-- designs, develops,
installs, manufactures and markets electronic hardware and
application software products, and engages in electronic
manufacturing services primarily in the telecommunication
industry.
The company focuses on three major telecommunications markets.
The first is the monitoring of alarms from PBXs, voice mail
systems and data networks.
The second telecommunications market is in the Digital Switching
Systems arena which involves providing telephone switches to Small
and Medium Business Markets as well as advanced Automatic Call
Distribution. The company's premier product in this market is the
20-20(TM) switching system. The third telecommunications market
is VoIP.
The company's balance sheet as of June 30, 2008, showed $11.41
million in total assets, $17.98 million in total liabilities,
resulting to $6.57 million in shareholders' deficit. The company
also had $31.3 in accumulated deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $9.65 million in total current
assets available to pay $12.46 million in total current
liabilities.
THINKENGINE NETWORKS: Sept. 30 Balance Sheet Upside-Down by $2 Mln
------------------------------------------------------------------
ThinkEngine Networks Inc.'s balance sheet as of Sept. 30, 2008,
showed $1.36 million in total assets, $3.35 million in total
liabilities, resulting to $1.99 million in shareholders' deficit.
The company also had $16.2 million in accumulated deficit.
At Sept. 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $1.05 million in total current
assets available to pay $2.41 million in total current
liabilities.
The company posted $624,000 in net losses on $997,000 in net
revenues for the third quarter ended Sept. 30, 2008, compared with
$1,498,000 in net losses on $1,799,000 in net revenues for the
same period ended Sept. 30, 2007.
There are a number of factors that have negatively impacted the
company's liquidity, and may impact the company's ability to
function as a going concern. The company has sustained net losses
of approximately $7.5 million and $5.6 million for the years ended
Dec. 31, 2007 and 2006, respectively, and a net loss of
approximately $1.8 million for the nine months ended Sept. 30,
2008. The company has an accumulated deficit of approximately
$16.2 million, a stockholders' deficit of approximately
$2.0 million and a working capital deficit of $1.4 million at
Sept. 30, 2008. Additionally, the company had a cash balance of
$0.2 million at Sept. 30, 2008 and has limited available
borrowings under its accounts receivable financing agreement.
These factors raise substantial doubt about the company's ability
to continue as a going concern.
Full-text copy of the ThinkEngine Networks' third quarter results
is available free of charge at:
http://researcharchives.com/t/s?345d
Going Concern Doubt
Carlin, Charron & Rosen, LLP, in Glastonbury, Conn., expressed
substantial doubt about Thinkengine Networks Inc.'s ability to
continue as a going concern after auditing the company's financial
statements for the years ended Dec. 31, 2007, and 2006. The
auditing firm pointed to the company's net losses for the years
ended Dec. 31, 2007, and 2006, accumulated deficit, stockholders'
deficit and limited working capital at Dec. 31, 2007.
About ThinkEngine Networks
Headquartered in Marlborough, Mass., ThinkEngine Networks Inc.
(Pink Sheets: THNK) -- http://www.thinkengine.com/-- is a
provider of time division multiplexer (TDM) and Internet Protocol
(IP) capable conferencing bridges and media servers.
THINKENGINE NETWORKS: Sept. 30 Balance Sheet Upside-down by $1.9MM
------------------------------------------------------------------
ThinkEngine Networks Inc.'s balance sheet at Sept. 30, 2008,
showed $1,355,000 in total assets and $3,349,000 in total
liabilities resulting in a $1,994,000 stockholders' deficit.
The company's balance sheet also showed strained liquidity with
$1,048 in total current assets available to pay $2,411,000 in
total current liabilities.
The company reported $624,000 net loss on total revenues of
$997,000 for the three months ended Sept. 30, 2008, compared to
$1,498,000 net loss on total revenues of $1,799,000 for the same
period a year ago.
Going Concern Doubt
Carlin, Charron & Rosen, LLP, in Glastonbury, Conn., expressed
substantial doubt about Thinkengine Networks Inc.'s ability to
continue as a going concern after auditing the company's financial
statements for the years ended Dec. 31, 2007, and 2006. The
auditing firm pointed to the company's net losses for the years
ended Dec. 31, 2007, and 2006, accumulated deficit, stockholders'
deficit and limited working capital at Dec. 31, 2007.
A full-text copy of the company's regulatory filing is available
for free at http://ResearchArchives.com/t/s?345d
About ThinkEngine Networks
Headquartered in Marlborough, Mass., ThinkEngine Networks Inc.
(Pink Sheets: THNK) -- http://www.thinkengine.com/-- is a
provider of time division multiplexer (TDM) and Internet Protocol
(IP) capable conferencing bridges and media servers.
TOUSA INC: Updates Restructuring Plan; Valued at $399Mln
--------------------------------------------------------
TOUSA, Inc., and its debtor subsidiaries delivered to the United
States Bankruptcy Court for the Southern District of Florida
an amended version of their Joint Plan of Reorganization and
Disclosure Statement dated Oct. 24, 2008.
TOUSA related that since Oct. 13, 2008, it has received comments
to the Disclosure Statement from certain creditors and the
Official Committee of Unsecured Creditors. TOUSA has thus decided
to update certain information in the Disclosure Statement to
address those comments.
Among others, TOUSA has added information to the Disclosure
Statement and the exhibits with respect to (1) valuation, (2)
financial projections, (3) the liquidation analysis and (4) the
terms of the proposed new notes to be issued under the Plan,
according to Paul Steven Singerman, Esq., at Berger Singerman,
P.A., in Miami, Florida.
Enterprise Valuation
TOUSA, with the help of Lazard Freres & Co. LLC, its financial
adviser, prepare a valuation of its assets. The Valuation will
determine the value available for distribution to holders of
Allowed Claims pursuant to the Amended Plan and relative
recoveries to Claim Holders.
Upon analyses, Lazard makes these conclusions:
(1) The Enterprise Value of Reorganized TOUSA homebuilding
operations is between $349 million to $448 million, with a
midpoint of $399 million as of an assumed plan effective
date of December 31, 2008.
Lazard believe no material changes would affect value
occurring between the date of the Amended Disclosure
Statement and the Assumed Effective Date.
(2) Including an estimated value of $21 million for the non-
Debtor financial services businesses owned by TOUSA Homes,
Inc., the aggregate Distributable Value of the Reorganized
Debtors ranges from $370 million to $469 million, with a
midpoint of $420 million.
(3) Based on the anticipated net debt level of New TOUSA and
Reorganized TOUSA at the Effective Date, the range of
estimated Distributable Value implies a value for the
New Common Stock of $184 million to $283 million with a
midpoint of $234 million.
The estimated total value available for distribution to Holders of
Allowed Claims is based upon an estimated value of Reorganized
TOUSA's homebuilding operations on a going concern basis and the
value of the non-Debtor financial services business.
The Valuation, Lazard explained, addressed the estimated going
concern Enterprise Value of TOUSA in the event the Amended Plan is
approved. The Valuation, however, does not address other aspects
of the proposed reorganization, the Amended Plan or any other
transactions. It also does not address TOUSA's underlying
business decision to effect the reorganization set forth in the
Amended Plan.
Moreover, TOUSA submitted to the Court a book valuation for each
subsidiary debtor to illustrate the relative book value of the
Subsidiary Debtors' assets for purposes of evaluating possible
allocations of New TOUSA Stock among the Subsidiary Debtors.
A full-text copy of the TOUSA Valuation is available at no charge
at http://ResearchArchives.com/t/s?345a
New Notes Under the Plan
The Plan provides that, on the Effective Date, New TOUSA will
acquire all of the stock in the Reorganizing Subsidiary Debtors
and the Non-Operating Subsidiary Debtors in exchange for a package
of Plan Currency including (1) New TOUSA stock, (ii) secured
notes, and (iii) cash.
The First Lien Lenders will receive new notes that provide a
stream of payments valued at the full amount of their claims.
The new notes are guaranteed by all the Reorganizing Debtors and
secured by substantially all of the assets of the reorganized
company as a whole. Separate notes will be issued in satisfaction
of each of the two prepetition first lien secured credit
facilities -- New Revolver Notes and New First Lien Notes.
In addition, the Second Lien Lenders will receive the New Second
Lien PIK Note.
Copies of the term sheets for the New Notes are attached to the
Amended Disclosure Statement.
The Amended Plan contemplates that amount of the New Notes will be
set forth in the Confirmation Order and will not exceed:
Under Under
New Notes Oct. 24 Plan Oct. 13 Plan
--------- ------------ ------------
New Revolver Notes $185,347,269 $184,430,158
New First Lien Notes $128,743,408 $128,106,376
New Second Lien PIK Notes $15,000,000 $15,000,000
Liquidation Analysis
The Liquidation Analysis prepared by TOUSA estimates a high
recovery of 100% and a low recovery of 51% with respect to the
First Lien Secured Debt if the TOUSA cases were converted to a
proceeding under Chapter 7 of the Bankruptcy Code.
It also forecasts a high recovery of 7% and a low recovery of 0%
with respect to the Second Lien Secured Debt if the TOUSA cases
were converted to a proceeding under Chapter 7 of the Bankruptcy
Code.
TOUSA also prepared financial projections for its operations for
the fiscal year ended 2008 through 2012.
Other Disclosures
Under the Amended Plan, TOUSA disclosed additional information on
the current developments of their Chapter 11 cases, including:
(1) A preliminary estimate of general unsecured claims asserted
against each Debtor subsidiary, totaling about $1.7 billion:
Estimated
Debtor Claims Amount
------ -------------
Tousa, Inc. $1,357,143,566
TOUSA Homes, Inc. 277,638,957
Engle Homes Residential Const. L.L.C. 54,793,744
Newmark Homes, LP 11,356,517
TOUSA Associates Services Company 3,487,126
TOUSA Homes Florida, LP 3,052,284
TOUSA Investment #2, Inc. 849,508
Engle Homes Commercial Construction, LLC 594,200
Newmark Homes Purchasing, LP 501,772
Newmark Homes, LLC 307,451
TOUSA Mid-Atlantic Investment, LLC 54,211
Engle/James LLC 41,176
Engle/Gilligan, LLC 25,529
Reflection Key, LLC 23,129
Engle Sierra Verde P4, LLC 22,271
Engle Sierra Verde P5, LLC 18,946
Newmark Homes Business Trust 12,647
McKay Landing, LLC 6,120
Lorton South Condominium, LLC 5,990
TOUSA Homes Colorado, LLC 3,610
TOUSA Homes Investment #2, LLC 2,558
Engle Homes Delaware, Inc. 575
TOUSA Homes Arizona, LLC 150
TOUSA Realty, Inc. 150
TOUSA Homes Mid-Atlantic, LLC 100
TOUSA, LLC 0
TOUSA/West Holdings, Inc. 0
LB/TE #1, LLC 0
TOUSA Homes Nevada, LLC 0
TOUSA Homes Mid-Atlantic Holding, LLC 0
TOUSA Homes Investment #1, Inc. 0
TOUSA Homes Investment #2, Inc. 0
TOI, LLC 0
TOUSA Delaware, Inc. 0
TOUSA Funding, LLC 0
Silverlake, Interests LLC 0
Preferred Builders Realty, Inc. 0
---------------
$1,709,942,285
===============
(2) A summary of documented loans presently outstanding between
Subsidiary Debtors that may give rise to allowed Subsidiary
Intercompany Claims:
Payee
---------------------------------------
Engle Homes TOUSA TOUSA
Delaware, Delaware, Funding,
Borrower Inc. Inc. LLC
-------- ----------- --------- ----------
Engle Homes
Residential
Construction, LLC -- -- $62,027,000
Newmark Homes, LP -- -- $54,338,171
TOUSA Homes, Inc. $32,889,514 -- $613,540,079
TOUSA, Inc. $100,000,000 $100,000,000 $250,000,000
------------ ------------ ------------
$132,889,514 $100,000,000 $979,905,250
The intercompany loan agreements aggregate $1.2 billion.
(3) Recent developments in the adversary proceeding initiated by
the Official Committee of Unsecured Creditors against the
Debtors' prepetition secured lenders for the pursuit of
certain potential fraudulent claims.
The Committee amended its Complaint against the Prepetition
Lenders in mid-October 2008, adding six new counts, alleging
fraudulent transfer claims against the "Transeastern
Transferees" under the Florida Statutes and the Bankruptcy
Code. The trial for the Complaint has been moved to July
2009.
(4) Details on the lawsuit initiated by EMF Fund III LLC, et
al., against Antonio P. Mon and three other current or
former TOUSA officers in the Circuit Court of Broward
County, Florida.
(5) Court-approved extension of TOUSA's exclusive plan filing
period through February 22, 2009 and exclusive solicitation
period through April 23, 2009
A full-text copy of the 50+-page TOUSA Amended Plan is available
for free at http://ResearchArchives.com/t/s?3440
A full-text copy of the TOUSA Amended Disclosure Statement with
the accompanying exhibits is available for free at:
http://ResearchArchives.com/t/s?3444
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008.
(TOUSA Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TOUSA INC: Has Until February 22 to File Plan of Reorganization
---------------------------------------------------------------
The Hon. John Olson of the United States Bankruptcy Court for the
Southern District of Florida extended the period in which only
TOUSA, Inc., and its debtor subsidiariess may file a Chapter 11
plan through Feb. 22, 2009. The Debtors may solicit acceptances
to their Plan until April 23, 2009.
To recall, the Debtors filed a Joint Plan of Reorganization and
Disclosure Statement on Oct. 13, 2008
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town
homes, and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home. It also provides financial services to
its homebuyers and to others through its subsidiaries, Preferred
Home Mortgage Company and Universal Land Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008.
(TOUSA Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
US AIRWAYS: Enters into Amendment to Loan and Other Agreements
--------------------------------------------------------------
In a Form 8-k filing with the Securities and Exchange Commission
dated Oct. 23, 2008, US Airways Group, Inc., disclosed that on
Oct. 20, 2008, it entered into an amendment to the Loan
Agreement dated as of March 23, 2007, as amended, among US
Airways Group, certain of its subsidiaries signatory, and
Citicorp North America, Inc., as administrative agent and
collateral agent for the lenders.
Derek J. Kerr, senior vice president and chief financial officer
of US Airways Group, Inc., related that pursuant to the Loan
Agreement Amendment, US Airways Group repaid $400 million of
indebtedness reducing the principal amount outstanding to
approximately $1.184 billion. According to Mr. Kerr, the Loan
Agreement Amendment also provided for a reduction in the amount
of unrestricted cash required to be held by US Airways Group from
$1.25 billion to $850 million, and US Airways Group may, prior to
Sept. 30, 2009, further reduce that minimum requirement to
$750 million if it repays up to $100 million amount of
indebtedness under the Loan Agreement.
The Loan Agreement Amendment also provided that US Airways Group
may sell, finance or otherwise pledge assets that were pledged as
collateral under the Loan Agreement, so long as it prepays the
indebtedness for 75% of the appraised value of the collateral
sold or assigned or 75% of the collateral value of eligible
accounts determined in accordance with the Loan Agreement sold or
financed in such transaction. In addition, the Loan Agreement
Amendment provided that US Airways Group may issue debt in the
future with a silent second lien on the assets pledged as
collateral under the Loan Agreement.
Amendment to America West Card Agreement
The filing disclosed that US Airways Group also entered into
Amendment No. 6 to the America West Co-Branded Card Agreement,
effective as of October 20, 2008, with Barclays Bank Delaware.
The Co-Branded Card Amendment provided for, among other things,
the pre-purchase of frequent flyer miles in an amount totaling
$200 million. The Co-Branded Card Amendment provided that so
long as any pre-purchased miles are outstanding, US Airways Group
will pay interest to Barclays on the outstanding dollar amount of
the pre-purchased miles at the rate of LIBOR plus a margin.
According to Mr. Kerr, the Co-Branded Card Amendment provided
that Barclays will compensate US Airways Group for fees earned
using pre-purchased miles. In addition, the Co-Branded Card
Amendment provided that for each month that certain conditions
are met, Barclays will pre-purchase additional miles on a monthly
basis in an amount equal to the difference between $200 million
and the amount of unused miles then outstanding. Prior to the
second anniversary of the date of the Co-Branded Card Amendment,
the Cap may be reduced if certain conditions are not met.
Commencing on the Reduction Commencement Date, the Cap will be
reduced over a period of approximately two years until the time
as no pre-purchased miles remain; provided, that the time of
reduction of the Cap may be accelerated if certain conditions are
not met.
Furthermore, US Airways Group may repurchase any or all of the
pre-purchased miles at any time, from time to time, without
penalty.
Pursuant to the Co-Branded Card Amendment, the expiration date of
the Co-Branded Card Agreement was extended to 2017.
Amendment to Spare Parts Loan Agreement
On Oct. 20, 2008, US Airways, Inc. entered into (i) a $270 million
Loan Agreement [Spare Parts] with the lenders from time to time
party thereto and General Electric Capital Corporation, as
administrative agent and collateral agent, and (ii) a
$85.171 million Loan Agreement [Engines] and together with the
Spare Parts Loan Agreement with the lenders from time to time
party thereto and the administrative agent and collateral agent.
The proceeds of the term loans made under the New Loan Agreements
were used to repay a portion of the outstanding indebtedness
under the Loan Agreement pursuant to the Loan Agreement
Amendment.
US Airways' obligations under the Spare Parts Loan Agreement are
secured by a first priority security interest in substantially
all of US Airways' rotable, repairable and expendable parts. The
obligations under the Engines Loan Agreement are secured by a
first priority security interest in 36 of US Airways' aircraft
engines. US Airways has also agreed that other obligations owed
by it or its affiliates to the administrative agent or its
affiliates will be secured on a second priority basis by the
Spare Parts Collateral, the Engines Collateral and certain other
engines and aircraft.
Mr. Kerr noted that the term loans under the New Loan Agreements
will bear interest at a rate equal to LIBOR plus a margin per
annum, subject to adjustment in certain circumstances.
The Spare Parts Loan Agreement contains customary representations
and warranties, events of default and covenants for aircraft
spare parts financings of this nature. The covenants include
obligations to maintain compliance with covenants tied to the
appraised value of US Airways' spare parts. The Engines Loan
Agreement contains customary representations and warranties,
events of default and covenants for aircraft engine financings of
this nature. The covenants include obligations to maintain
compliance with covenants tied to the appraised value and
maintenance condition of US Airways engines.
The Spare Parts Loan Agreement matures on the sixth anniversary
of the closing date, and is subject to quarterly amortization in
amounts ranging from $7,500,000 to $15,000,000. The Spare Parts
Loan Agreement may not be voluntarily prepaid during the first
three years of the term; provided that in certain circumstances
US Airways may prepay $100,000,000 of the loans under the Spare
Parts Loan Agreement (in which case the Spare Parts Loan
Agreement will mature on the fifth anniversary of the closing
date). If the $100,000,000 prepayment is made, the lien on the
Spare Parts Collateral consisting of expendables will be
released. The Spare Parts Loan Agreement may be voluntarily
prepaid after the third anniversary of the closing date. The
Engines Loan Agreement, which may not be voluntarily prepaid
prior to the third anniversary of the closing date, matures on
the sixth anniversary of the closing date, and is subject to
amortization in 24 equal installments.
A330 Amendment
US Airways and Airbus S.A.S. also entered on Oct. 20, 2008,
into (i) Amendment No. 2 to the Amended and Restated Airbus A320
Family Aircraft Purchase Agreement dated as of Oct. 2, 2007,
(ii) Amendment No. 2 to the A330 Family Aircraft Purchase
Agreement dated as of Oct. 2, 2007 and (iii) Amendment No. 1
to the Amended and Restated Airbus A350 XWB Purchase Agreement
dated as of Oct. 2, 2007. In exchange for US Airways'
agreement to the amendments contained in the Purchase Agreement
Amendments, Airbus advanced to US Airways Group $200 million
earned in consideration of aircraft deliveries under the various
related purchase agreements.
Under the terms of each of the Purchase Agreement Amendments, US
Airways agreed to maintain a level of unrestricted cash in the
same amount required by the Loan Agreement.
In addition, under the terms of the A350 Amendment, deliveries of
the 22 firm order A350 XWB aircraft will begin in 2015, rather
than 2014, and will extend through 2018.
About US Airways Group Inc.
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 167; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
US AIRWAYS: Post $242MM Net Loss in Quarter ended September 30
-------------------------------------------------------------
US Airways Group, Inc.'s third quarter 2008 highlights include:
-- Excluding special charges, the company reported a net loss
of $242 million or $2.35 per share. The decline in
earnings was driven primarily by higher oil prices.
Holding fuel prices constant at third quarter 2007 prices
would have resulted in reduced fuel expenses of
approximately $538 million.
-- The company's GAAP (Generally Accepted Accounting
Principles) third quarter 2008 net loss was $865 million,
or $8.45 per share, which included special charges of
$623 million.
-- The company has significantly improved its liquidity
position and raised approximately $950 million of financing
and near-term liquidity commitments.
-- The company's operational improvement plan continues to
produce industry-leading on-time performance results.
When measured by the Department of Transportation against
the ten largest U.S. airlines, the company ranks number one
in on-time performance for the first eight months of 2008.
US Airways Group, Inc., reported a net loss for its third quarter
2008 of $242 million or $2.35 per share which excluded special
charges that totaled $623 million. Special charges in the third
quarter 2008 included $488 million of unrealized losses resulting
from mark-to-market adjustments on fuel hedging instruments. On a
GAAP basis, the company reported a net loss for its third quarter
2008 of $865 million, or $8.45 per share, compared to a net
profit of $177 million, or $1.87 per diluted share for the same
period last year.
US Airways Chairman and CEO Doug Parker said, "Our third quarter
loss reflects the crippling fuel price environment that US
Airways and other airlines faced this summer. Fortunately, oil
prices have recently fallen to levels well below those
experienced in the third quarter, but at the same time concerns
have increased about the impact the global economic crisis may
place on demand for air travel.
"While we are concerned about the global economic environment,
we are encouraged by the aggressive steps that both US Airways
and our industry have taken to adapt to a quickly changing and
challenging environment. We, along with the industry, have made
significant reductions in capacity for 2009 and beyond. The
industry is also moving to a more profitable a la carte pricing
model of its product and services with US Airways at the
forefront of that change. We expect these new a la carte
pricing initiatives to contribute between $400 million and
$500 million in revenue during 2009," Mr. Parker stated.
Mr. Parker said, "We are particularly pleased with the outstanding
operational reliability our team is producing. Through the first
eight months of 2008, US Airways ranked number one in on-time
performance among the ten largest US airlines as measured by
the DOT after ranking tenth on the same measure during 2007.
This remarkable turnaround is due to the efforts of all of our
employees. We are proud to have awarded nearly $16 million thus
far in 2008 through our Triple Play employee incentive program,
and we look forward to additional payouts in the months ahead.
"Our actions to improve profitability, as well as our
outstanding operational performance, have allowed us to raise
approximately $950 million of new financing and near-term
liquidity commitments which we announced separately. This
financing package dramatically improves our liquidity position
in these uncertain times and places US Airways' total cash
position relative to annual revenues among the highest of US
airlines," said Mr. Parker.
"In summary, we believe US Airways is very well positioned
to manage through turbulent times. We have reduced capacity to
better match demand and adjusted our business model to improve
profitability. Our team is doing an outstanding job of taking
care of our customers and our investors and business partners
have displayed confidence in us with $950 million of new
financing and near-term liquidity commitments. While it is
difficult to make projections in such volatile times, based on
what we know today which includes the current price of fuel, we
expect 2009 will be a much better year than 2008 for both US
Airways and our industry," concluded Mr. Parker.
Revenue and Cost Comparisons
Mainline passenger revenue per available seat mile in the third
quarter was 11.32 cents, up 4.4% over the same period last year.
Express PRASM was 19.55 cents, up 1.3% over the third quarter
2007. Total mainline and Express PRASM for US Airways Group was
12.71 cents, which was up 4.6% over the third quarter 2007 on a
0.4% increase in total available seat miles.
Mainline cost per available seat mile was 16.01 cents, up 44.1%
versus the same period last year on a decrease in mainline
capacity of 1.4% versus the third quarter of 2007. Fuel expense
was the driver in the company's increase in unit costs as the
average mainline fuel price per gallon (excluding realized
gains/losses on fuel hedging instruments) increased 68% year-over-
year. Excluding fuel, unrealized and realized gains/losses on
fuel hedging instruments, and special charges, mainline CASM was
8.08 cents, up 5.3% from the same period last year.
Chief financial officer Derek Kerr stated, "Our third quarter
results reflect the unprecedented rise in the price of fuel that
we and the industry faced throughout most of the summer. Had
the average price per gallon remained constant from the third
quarter 2007, our total fuel expense, including realized
gains/losses on fuel hedging instruments, would have been
approximately $538 million lower."
Third Quarter Special Charges
During the third quarter, the company recognized $623 million of
special charges. These special charges included a $488 million
non-cash unrealized net loss associated with the change in fair
value of the company's outstanding fuel hedge contracts, of which
approximately $320 million was a reversal of mark-to-market gains
recognized in prior periods. Other special charges included a
$127 million impairment loss on certain available for sale
auction rate securities, of which $103 million was previously
recorded in other comprehensive income (a subset of stockholders'
equity), that is now considered to be other than temporary, and
$8 million in charges related to involuntary furloughs well as
terminations of non-union administrative and management staff
as a result of capacity reductions.
Liquidity
As of Sept. 30, 2008, the company had $2.3 billion in total cash
and investments, of which $0.7 billion was restricted.
Included in the company's restricted cash balance was
$159 million related to letters of credit collateralizing
certain counterparties to the company's fuel hedging transactions.
During the quarter, the company raised $179 million through an
underwritten public stock offering. Proceeds from that offering
are included in the total cash and investments.
The company also announced it has raised approximately
$950 million of financing and near-term liquidity commitments.
On Oct. 20, 2008, the company closed on $800 million of these
transactions with $400 million of proceeds used to prepay the
company's $1.6 billion bank debt facility. In exchange for this
prepayment, the unrestricted cash covenant contained in the loan
agreement for the bank debt facility has been reduced from
$1.25 billion to $850 million. The remaining proceeds from these
financing transactions, approximately $370 million after payment
of certain bank and other service fees, increase the company's
total cash position and will be used for general corporate
purposes. The remaining $150 million of liquidity commitments are
expected to close during the fourth quarter, with cash benefits
realized through 2009.
Notable Accomplishments
Marketing
-- Announced plans to operate year-round, daily non-stop
service to Tel Aviv from the airline's Philadelphia hub.
This route, which has received DOT approval and is awaiting
Israeli government approval, is slated to begin July 1,
2009 and will be operated with A330-200 aircraft.
-- Also announced new seasonal service to Birmingham, United
Kingdom and Oslo, Norway from Philadelphia. The service is
slated to begin in May 2009 and be operated with Boeing 757
ETOPS aircraft.
-- Expanded the in-flight a la carte revenue model to include
beverages effective Aug. 1, 2008.
-- Extended the Choice Seats program, which now includes 25% of
the main cabin. The airline also began beta
testing Choice Seats sales at airport kiosks and ticket
counters at some locations, and anticipates full roll-out
through these channels by year's end.
Operations
-- US Airways sustained its operational turnaround momentum in
the third quarter with top-three finishes in August for
both on-time arrival and baggage handling performance among
the ten largest U.S. carriers according to the DOT. The
company has ranked in the top three of the ten largest US
airlines in seven of the eight reporting months (January
through August) for on-time arrival and ranks number one
cumulatively during this reporting period.
-- US Airways received its tenth consecutive Diamond Award for
maintenance training excellence from the Federal Aviation
Administration (FAA) for its Charlotte, North Carolina hub
line maintenance facility. The program, which began in
1991, consists of both initial and recurrent training in
FAA regulations and policy and aviation industry
maintenance training.
-- The company is aggressively enhancing airport
infrastructure through technology and re-design to create
cost efficiencies and improve the passenger travel
experience. Major projects include the installation of
gate readers to facilitate the boarding process and the
deployment of baggage scanners to facilitate baggage
handling.
People
-- As part of the company's employee incentive plan, employees
received $100 for US Airways' top-three on-time arrival and
baggage handling rankings ($50 for each goal) for the
August top-three ranking in both of these areas. Year-to-
date, employees have shared approximately $16 million in
"Triple Play" payments.
A full-text copy of US Airway's Quarterly Report can be accessed
for free at http://ResearchArchives.com/t/s?3457
US Airways Group, Inc.
Unaudited Condensed Consolidated Balance Sheet
As of September 30, 2008
Assets
Current Assets $1,168,000,000
Cash and cash equivalents 109,000,000
Restricted cash 161,000,000
Accounts receivable, net 423,000,000
Materials and supplies, net 261,000,000
Prepaid expenses and other 476,000,000
-------------
Total current assets 2,598,000,000
Property and equipment
Flight equipment 3,031,000,000
Ground property and equipment 777,000,000
Less accumulated depreciation and amort. (900,000,000)
-------------
2,908,000,000
Equipment purchase deposits 225,000,000
-------------
Total property and equipment 3,133,000,000
Other assets
Other intangibles, net of accumulated amortization
of $80 million and $62 million, respectively 551,000,000
Restricted cash 583,000,000
Investments in marketable securities 261,000,000
Goodwill -
Other assets, net 211,000,000
-------------
Total other assets 1,606,000,000
-------------
Total assets $7,337,000,000
=============
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of debt and capital leases $191,000,000
Accounts payable 538,000,000
Air traffic liability 962,000,000
Accrued compensation and vacation 173,000,000
Accrued taxes 122,000,000
Other accrued expenses 892,000,000
-------------
Total current liabilities 2,878,000,000
Noncurrent liabilities and deferred credits
Long Term debt and capital leases 3,423,000,000
Deferred gains and credits, net 152,000,000
Postretirement benefits other than pensions 136,000,000
Employee benefit liabilities and other 729,000,000
-------------
Total non-current liabilities and
deferred credits 4,440,000,000
Commitments and contingencies
Stockholders' equity 1,000,000
Additional paid-in capital 1,741,000,000
Accumulated other comprehensive income 55,000,000
Accumulated deficit (1,765,000,000)
Treasury stock, common stock, 413,993 shares at
September 30, 2008 and December 31, 2007 (13,000,000)
-------------
Total stockholders' equity 19,000,000
-------------
Total liabilities and stockholders' equity $7,337,000,000
=============
US Airways Group, Inc.
Unaudited Condensed Consolidated Statements of Operations
For Three Months Ended September 30, 2008
Operating revenues:
Mainline passenger $2,197,000,000
Express passenger 771,000,000
Cargo 37,000,000
Other 256,000,000
-------------
Total operating revenues 3,261,000,000
Operating expenses:
Aircraft fuel and related taxes 1,110,000,000
Loss(gain) on fuel hedging instruments, net 420,000,000
Salaries and related costs 567,000,000
Express expenses 844,000,000
Aircraft rent 183,000,000
Aircraft maintenance 188,000,000
Other rent and landing fees 137,000,000
Selling expenses 120,000,000
Special items, net 8,000,000
Depreciation and amortization 52,000,000
Goodwill impairment -
Other 321,000,000
-------------
Total operating expenses 3,950,000,000
-------------
Operating income(loss) (689,000,000)
Non-operating income(expense):
Interest income 19,000,000
Interest expense, net (57,000,000)
Other, net (135,000,000)
-------------
Total non-operating expense, net (173,000,000)
-------------
Income(loss) before income taxes (862,000,000)
Income tax provision 3,000,000
-------------
Net income (loss) ($865,000,000)
=============
US Airways Group, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
For Nine Months Ended September 30, 2008
Net Cash provided by (used in) operating
activities ($583,000,000)
Cash flows from investing activities:
Purchases of property and equipment (755,000,000)
Purchases of marketable securities (299,000,000)
Sales of marketable securities 416,000,000
Proceeds from sale of other investments 1,000,000
Decrease(increase) in long-term restricted cash (117,000,000)
Proceeds from dispositions of property and
equipment 17,000,000
Increase in equipment purchase deposits (97,000,000)
Other 2,000,000
-------------
Net Cash provided by investing activities (832,000,000)
Cash flows from financing activities:
Repayments of debt and capital lease obligations (205,000,000)
Proceeds from issuance of debt 669,000,000
Deferred financing costs (8,000,000)
Proceeds from issuance of common stock, net 179,000,000
-------------
Net Cash provided by financing activities 635,000,000
-------------
Net increase(decr.) in cash and cash equivalents (780,000,000)
Cash and cash equivalents at beginning period 1,948,000,000
-------------
Cash and cash equivalents at end of period $1,168,000,000
=============
About US Airways Group Inc.
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 167; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
US AIRWAYS: Secures $950 Million in Financing and Liquidity
-----------------------------------------------------------
US Airways Group, Inc. disclosed on Oct. 23, 2008, that as part of
a comprehensive liquidity program launched in mid August, the
company has raised approximately $950 million of financing and
near-term liquidity commitments.
According to the statement issued by USAir, the company, on
Oct. 20, 2008, closed on $800 million of these transactions
with $400 million of proceeds used to prepay the company's
$1.6 billion bank debt facility. In exchange for this prepayment,
the unrestricted cash covenant contained in the loan agreement
for the bank debt facility has been reduced from $1.25 billion
to $850 million. The loan agreement's term remains the same at
seven years with substantially all of the principal amount
payable at maturity in March 2014. The remaining proceeds from
these financing transactions, approximately $370 million after
payment of certain bank and other service fees, increase the
company?s total cash position and will be used for general
corporate purposes. The remaining $150 million of liquidity
commitments are expected to close during the fourth quarter, with
cash benefits realized through 2009.
"[The] announcement confirms that US Airways' financial footing
is solid," said chairman and CEO Doug Parker. "As a result of
these financings our total cash position relative to annual
revenues ranks solidly among the highest of the largest US
carriers. Most notably, we were able to complete this financing
in the midst of unprecedented global financial unrest, which is a
testament to the confidence our investors and business partners
have in the people of US Airways. We are extremely appreciative
of their support, and we intend to reward their commitment to us
by continuing to run a great operation and returning our airline
to profitability in the years ahead."
The company estimates that 2009 expenses will increase by
approximately $90 million due to costs related to these
transactions, of which approximately $65 million is non-cash.
"Combined with our August equity offering which generated
$179 million, and other financings completed during the quarter,
US Airways has raised or secured approximately $1.2 billion in
cash and payment deferrals since we released our second quarter
financial results," Chief Financial Officer Derek Kerr added.
"I want to personally thank and publicly acknowledge our internal
finance and legal teams for their exceptional and diligent work
over this period. Our outside advisors were also extremely
helpful in this endeavor. On behalf of the entire US Airways
leadership team, we thank Seabury Group Chairman and CEO John
Luth and his team for their outstanding work as our financial
advisor, as well as the team at Skadden, Arps, Slate, Meagher &
Flom LLP for their excellent legal counsel."
Republic Airways to Provide
Up to $35 Million of Loans to USAir
Republic Airways Holdings Inc. announced that it has entered
into a loan agreement with US Airways to provide up to
$35 million in two tranches. The first tranche of $10 million
was funded on Oct. 20, 2008. At US Airways' option, and subject
to certain other conditions, the second tranche of $25 million
may be funded in the first quarter 2009. Interest will be paid
quarterly, with the principal amounts to be repaid between October
2009 and October 2011.
"US Airways and Republic have enjoyed a successful partnership
for nearly 35 years," said Republic President and CEO Bryan
Bedford. "Through this partnership and over that time, we
have developed a mutually beneficial relationship that centers
on a commitment to our customers, employees and shareholders.
Our investment in US Airways' today simply reaffirms our
commitment to US Airways and its ability to continue managing
through uncertain economic times for our industry."
US Airways Express president Dion Flannery stated, "We are
extremely appreciative of the commitment Republic is making
today, and greatly value their support over our long-standing
partnership. We will work diligently with them so that our
customers continue to benefit from our partnership and we look
forward to future success with this integral partner in the US
Airways network."
About US Airways Group Inc.
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 167; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
USG CORP: Weak Operating Results Cue S&P to Cut Rating to 'BB-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on USG
Corp., including its corporate credit rating to 'BB-' from 'BB+',
and placed the ratings on CreditWatch with negative implications.
The downgrade and CreditWatch listing follow weaker-than-expected
third operating results resulting from the continued housing slump
and recent weakness in commercial construction, a trend S&P
expects to continue in the near term. In addition, the company
disclosed that absent significant cost cuts, other financing
arrangements or modifications to its credit agreement, the company
will have difficulty meeting the minimum EBITDA covenant at the
end of the first quarter of 2009 and possibly as early as the end
of the fourth quarter of 2008.
In resolving the CreditWatch listing, S&P will consider the
implications that the current economic conditions are likely to
have on the company's operations, financial profile, and liquidity
position over the next few quarters. In addition, S&P will
monitor operating performance relative to potential covenant
breaches and the status of negotiations with its bank group
regarding potential waivers or other financing arrangements if
needed.
VERTICAL CDO: S&P Lowers All Rated Notes Ratings; Keeps Neg. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on all
rated notes issued by Vertical CDO 2003-1 Ltd. and Vertical CDO
2004-1 Ltd. The ratings remain on CreditWatch with negative
implications because significant portions of the underlying
portfolio have ratings on CreditWatch negative. Vertical CDO
2003-1 Ltd. and Vertical CDO 2004-1 Ltd. are both hybrid
collateralized debt obligation transactions referencing primarily
CDOs.
The lowered ratings primarily reflect negative rating migration in
the CDO assets referenced by the transactions. In addition, 39%
and 38%, respectively, of the ratings in the underlying portfolios
of Vertical CDO 2003-1 and Vertical CDO 2004-1 are on CreditWatch
with negative implications. Both transactions also have
significant exposure to trust-preferred CDOs and CDOs of asset-
backed securities that are currently on CreditWatch negative.
Additionally, Standard & Poor's noted that the impact of the
credit migration in the underlying portfolios has been increased
because of the high degree of overlap between the synthetic and
cash assets held in the portfolio. Standard & Poor's believes
this overlap may have the effect of diminishing the transactions'
ability to make protection payments on future credit events in
their underlying synthetic portfolio.
Standard & Poor's will continue to review whether the ratings
currently assigned to the notes remain consistent with the credit
enhancement available to support them.
Ratings Lowered and Remaining on Creditwatch Negative
Vertical CDO 2003-1 Ltd.
Class To From Balance (mil. $)
----- -- ---- ----------------
A BBB/Watch Neg AAA/Watch Neg 31.735
B BB-/Watch Neg AA/Watch Neg 18.000
Vertical CDO 2004-1 Ltd.
Class To From Balance (mil. $)
----- -- ---- ----------------
A BBB-/Watch Neg AAA/Watch Neg 49.700
B B+/Watch Neg AA-/Watch Neg 17.000
VESTA INSURANCE: Gaines Has No Tax Liabilities, Says Plan Trustee
-----------------------------------------------------------------
Kevin O'Halloran, in his capacity as Plan Trustee for J. Gordon
Gaines, Inc., sought the United States Bankruptcy Court for the
Northren District of Alabama's determination that Gaines has
$0 tax liability to the Internal Revenue Service for the 2006,
2007 and 2008 tax years. The Plan Trustee also maintained that
Gaines has $0 state tax liability to the Alabama Department of
Revenue for the tax years 2006 to 2008.
On behalf of the IRS, Assistant U.S. Attorney Lloyd C. Peeples
III contends that under Section 505 of the Bankruptcy Code the
Court lacks jurisdiction to determine the tax liabilities.
Because the Court confirmed Gaines' Plan on December 22, 2006, it
lacks jurisdiction to determine tax liabilities for the 2006,
2007, and 2008 tax years, he explains.
Similarly, ADR Assistant Counsel Lionel C. Williams agrees with
the IRS that the Plan Trustee's request should be dismissed
because the Court lacks jurisdiction to determine post-
confirmation tax liabilities of a Chapter 11 Debtor like Gaines.
Mr. Peeples points out that because Gaines filed its last three
tax returns on January 7, 2008, for the 2006 tax year, and
September 5, 2008, for the 2007 and 2008 final tax years, showing
substantial losses in each year, Gaines asserts that no taxes are
owed. However, he maintains that the Plan Trustee's "bald
assertions" are inadequate for the Court to make the
determination under Section 505(b) of the Bankruptcy Code.
Mr. Peeples adds that the IRS has not yet had any opportunity to
examine the three returns for which the Plan Trustee says Gaines
have no taxes owed.
Asking the Court to determine that no taxes are due on the post-
confirmation returns, and showing the huge losses that were never
identified to the IRS as requiring expedited examination, run
afoul of Section 505 and prevent any meaningful review by both
the IRS and the Court, Mr. Peeples contends.
In the same manner, Mr. Williams contends that the Plan Trustee
has failed to comply with the requisite procedures under Section
505(b)(2) for the determination of administrative tax
liabilities.
Furthermore, the Department's records reflect that Gaines has yet
to file a return for certain prior tax years, Mr. Williams tells
the Court. The ADR has an affirmative right to review the
Debtors' returns and conduct its own audit, he adds.
Gaines Trustee Responds
Mr. O'Halloran argues that Section 505(a) does not restrict the
power of the Court to any pre- and postpetition, and post-
confirmation periods.
"In the liquidation context, Bankruptcy Courts have not hesitated
to conclude that they retain jurisdiction over post-confirmation
matters, [including] claims determinations and asset recovery,
Rufus T. Dorsey, Esq., at Parker, Hudson, Rainer & Dobbs LLP,
argues for the Gaines Trustee, citing In re S.N.A. Nut Co., 206
B.R. 495, 500 (Bankr. N.D. III. 1997).
Mr. Dorsey adds that the language of Section 502(b)(2) clearly
states that a trustee may request a determination by filing a tax
return. Therefore, he continues, the ADR's and the IRS' argument
that the Plan Trustee must comply with the procedures set in
Section 502(b)(2) before the Court could adjudicate the tax
controversy "is unpersuasive."
Accordingly, Mr. O'Halloran asks the Court to determine that
no taxes are owed by Gaines to the ADR and the IRS.
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors. In its schedules of
assets and liabilities, Vesta listed $14,919,938 in total assets
and $214,278,847 in total liabilities.
J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that
manages the company's numerous insurance subsidiaries and employs
the headquarters workers. The company filed for chapter 11
protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808).
Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP,
represent the Debtor in its restructuring efforts. In its
schedules of assets and liabilities, Gaines listed $19,818,094 in
total assets and $16,046,237 in total liabilities.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered an order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
Florida Select Insurance Agency Inc., an affiliate, filed for
chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No.
07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer &
Dobbs LLP, represents Florida Select. The Court confirmed FSIA's
plan on March 24, 2008.
(Vesta Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VESTA INSURANCE: Trustee Wants Court to Deny Haskel Dismissal Plea
------------------------------------------------------------------
Wyatt R. Haskell and William K. Holbrook contend that the claims
they have brought against Norman W. Gayle, III, James E. Tait,
Hopson B. Nance, W. Perry Cronin, E. Murray Meadows, John C.
Hines, David W. Lacefield, Thomas J. Chana, and Thomas E. Mangold
in the State Court Action "are not derivative in nature."
The Plaintiffs commenced the State Court Action to recover
damages allegedly caused by the dissemination of false and
misleading financial information by Vesta Insurance Inc., with
respect to its insurance subsidiaries. The State Court Action was
remanded to the Circuit Court of Jefferson County, Alabama.
To determine if a claim is derivative, the Court must look to the
law of the state where the corporation was incorporated or the
state law of the forum in which the claims are being asserted, R.
Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC,
in Birmingham, Alabama, avers on behalf of the Messrs. Haskell
and Holbrook.
Pursuant to state laws of Alabama and Delaware, where Vesta was
incorporated, Messrs. Haskell and Holbrook's claims cannot be
considered a derivative action that would belong to the Plan
Trustee, Mr. Williams assert. Both Alabama and Delaware law
dictate that derivative lawsuits can only be brought by a
shareholder or member of the Corporation, Mr. Williams maintains,
citing In re Barton v. Alabama Elec. Co-op, Inc., 487 So .2d 884,
885 (Ala. 1986).
Accordingly, as neither Mr. Haskell nor Mr. Holbrook is suing as
a shareholder of Vesta, their Claims cannot be considered
derivative in nature, Mr. Williams adds.
Mr. Williams clarifies that Messrs. Haskell and Holbrook's Claims
do not assert damage to Vesta, because they are asserted as
direct, state law claims for the damages suffered as a result of
the actions of the D&Os, and not for damages the Corporation may
have suffered. Hence, he continues, the Claims are not
derivative and cannot be asserted by the Trustee.
Moreover, Messrs. Haskell and Holbrook's participation in Vesta's
bankruptcy case, including not objecting to the Plan, has no
affect on their right to assert claims for their own direct
injuries caused by the D&Os, Mr. Williams argues.
In addition, Messrs. Haskell and Holbrook's Claims in no way
impact Vesta's Plan, because "once a plan is confirmed, the
Bankruptcy Court's jurisdiction is limited to matters pertaining
to the implementation or execution of the plan." Mr. Williams
says, citing In re Seven Seas Petroleum, Inc., v. Chesapeake
Energy Corp. Thus, the Court lacks the authority enjoin Messrs.
Haskell and Holbrook from prosecuting their Claims in the State
Court Action.
Plan Trustee Submits Insurance Policy
to Support Complaint Against Defendants
Lloyd T. Whitaker, in his capacity as Plan Trustee for Vesta
Insurance Group, Inc., submitted to the Court, on October 14,
2008, a copy of Lloyd's Excess Liability Policy No. 066442236A05.
Mr. Whitaker deems the disclosure of the Policy as his final
statement in opposition to the request of Messrs. Haskell and
Holbrook to dismiss his complaint against them. Mr. Whitaker
believes that a reply to Messrs. Haskell and Holbrook's dismissal
request is not necessary.
Mr. Whitaker maintains that when litigation is instituted against
former Vesta D&Os based on alleged acts or omissions, and their
expenses of defending the litigation are advanced by the D&O
insurer, the D&O Policies are diminished in value because defense
expenses erode the policy limits. Accordingly, the Plan Trustee
says, the Bankruptcy Court has, and should exercise, the power to
prevent diminution in value of property of the estate.
For these reasons, the Plan Trustee asks the Court to deny
the Messrs. Haskell and Holbrook's request to dismiss the
Adversary Proceeding.
Full-text copies of the Lloyd's Policy and the Vesta's Renewal
Application for Management Liability Insurance are available for
free at:
http://bankrupt.com/misc/Vesta_LloydsExcessLiabilityPolicy.pdf
http://bankrupt.com/misc/Vesta_RenewalApplication.pdf
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors. In its schedules of
assets and liabilities, Vesta listed $14,919,938 in total assets
and $214,278,847 in total liabilities.
J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that
manages the company's numerous insurance subsidiaries and employs
the headquarters workers. The company filed for chapter 11
protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808).
Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP,
represent the Debtor in its restructuring efforts. In its
schedules of assets and liabilities, Gaines listed $19,818,094 in
total assets and $16,046,237 in total liabilities.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered an order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
Florida Select Insurance Agency Inc., an affiliate, filed for
chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No.
07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer &
Dobbs LLP, represents Florida Select. The Court confirmed FSIA's
plan on March 24, 2008.
(Vesta Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VESTA INSURANCE: Trustee Wants Until Nov. 26 to File Responses
--------------------------------------------------------------
Lloyd T. Whitaker, in his capacity as Plan Trustee for Vesta
Insurance Group, Inc.; Prime Tempus, Inc., as Special Deputy
Receiver for the Texas insurers, composed of VIG's subsidiaries,
including Vesta Fire Insurance Corporation, Vesta Insurance
Corporation, Shelby Casualty Insurance Company, Shelby Insurance
Company, Texas Select Lloyds Insurance Company, and Select
Insurance Services, Inc.; and PricewaterhouseCoopers, LLP, ask
the United States Bankruptcy Court for the Northern District of
Alabama to extend the time within which PwC may file and
respond to pleadings, through and including November 26, 2008.
The Vesta Plan Trustee and the Receiver has jointly alleged that
PwC committed professional negligence and breach of contract in
performing auditing services for the parties.
In a joint request filed with the Court, the parties disclose
that given the significant legal issues surrounding the Adversary
Proceeding that will require resolution, the proposed Extension
is necessary.
Accordingly, the parties ask the Court to grant the Extension and
reschedule a status conference at its convenience.
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors. In its schedules of
assets and liabilities, Vesta listed $14,919,938 in total assets
and $214,278,847 in total liabilities.
J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that
manages the company's numerous insurance subsidiaries and employs
the headquarters workers. The company filed for chapter 11
protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808).
Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP,
represent the Debtor in its restructuring efforts. In its
schedules of assets and liabilities, Gaines listed $19,818,094 in
total assets and $16,046,237 in total liabilities.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered an order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
Florida Select Insurance Agency Inc., an affiliate, filed for
chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No.
07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer &
Dobbs LLP, represents Florida Select. The Court confirmed FSIA's
plan on March 24, 2008.
(Vesta Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VESTA INSURANCE: Court Approves Whitaker-Tait Agreement
-------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Alabama approved the stipulation between Lloyd T. Whitaker, in his
capacity as Plan Trustee for Vesta Insurance Group, Inc., and
James E. Tait, a former officer and director of Vesta, with
respect to the prosecution of Mr. Whitaker's $80,000,000 Claim in
Mr. Tait's bankruptcy case.
The Plan trustee instituted an adversary proceeding against
certain Vesta directors and officers for acts and omissions in
their capacities as Vesta officers in the case styled Lloyd T.
Whitaker, Plan Trustee for the Estate of Vesta Insurance Group,
Inc. v. Norman W. Gayle, III, et al. The Defendants include
Mr. Tait.
The Adversary Proceeding was stayed solely with respect to
Mr. Tait in light of his filing for bankruptcy protection in the
U.S. Bankruptcy Court for the Northern District of Alabama,
Southern Division.
In this regard, the Plan Trustee and Mr. Tait entered into a
settlement agreement, under which Mr. Tait consents to the lifting
of the stay in his bankruptcy case solely to permit the Plan
Trustee to prosecute his Claim to final judgment or settlement.
The parties agree that, among other things, the Plan Trustee will
solely look to the proceeds of the D&O insurance policies --
consisting of XL Specialty Insurance Company, Lloyd's Policy
Signing Office and Indian Harbor Insurance Company -- for partial
or full recovery of any judgment against Mr. Tait on, or
settlement of, the Plan Trustee's Claims.
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors. In its schedules of
assets and liabilities, Vesta listed $14,919,938 in total assets
and $214,278,847 in total liabilities.
J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that
manages the company's numerous insurance subsidiaries and employs
the headquarters workers. The company filed for chapter 11
protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808).
Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP,
represent the Debtor in its restructuring efforts. In its
schedules of assets and liabilities, Gaines listed $19,818,094 in
total assets and $16,046,237 in total liabilities.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered an order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
Florida Select Insurance Agency Inc., an affiliate, filed for
chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No.
07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer &
Dobbs LLP, represents Florida Select. The Court confirmed FSIA's
plan on March 24, 2008.
(Vesta Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VIASPACE INC: Unit to Acquire Two Firms Under Purchase Agreement
----------------------------------------------------------------
VIASPACE Inc. disclosed in a Securities and Exchange Commission
filing that on Oct. 21, 2008, the company and its wholly owned
subsidiary, VIASPACE Green Energy Inc. entered into a Securities
Purchase Agreement with Sung Hsien Chang, an individual, and China
Gate Technology Co., Ltd.
Under the Purchase Agreement, VGE would acquire 100% of Inter-
Pacific Arts Corp., and the entire equity interest of Guangzhou
Inter-Pacific Arts Corp. from Mr. Chang, the sole shareholder of
IPA BVI and IPA China. In exchange, the company agreed to pay $16
million in a combination of cash, and newly issued shares of
company and VGE stock. In addition, the company issued shares of
its common stock to China Gate for China Gate's license of certain
fast growing grass technology to IPA China.
IPA BVI and IPA China specialize in the manufacturing of high
quality, copyrighted, framed artwork sold in U.S. retail chain
stores. IPA China also has a license to grow and sell a new fast-
growing hybrid grass to be used for production of biofuels and as
feed for livestock.
The acquisition of IPA BVI and IPA China will be completed through
two closings. At the first closing which took place on Oct. 21,
2008, VGE issued 3,500,000 newly-issued shares to Mr. Chang and
his designees. The company issued 215,384,615 shares of its
common stock to Mr. Chang and 30,576,007 shares of common stock to
China Gate. Mr. Chang delivered 70% of the outstanding common
stock of IPA BVI. In addition, VGE executed employment agreements
with certain persons, including Sung Mr. Chang; Carl Kukkonen, the
company's Chief Executive Officer; Stephen Muzi, the company's
Chief Financial Officer; and Maclean Wang, the sole shareholder of
the China Gate. The company also entered into a Mr. Chang
Agreement with Mr. Chang regarding the rights as shareholders of
VGE.
The second closing will be held within 240 days after the first
closing. At the Second Closing, the company shall pay
$4.8 million plus Interest since the First Closing, in cash to Mr.
Chang. Interest on the Cash Consideration shall accrue at 6% for
the first six months after the First Closing, and then 18%
thereafter. The company shall also issue 1.8% of its then
outstanding shares of common stock to China Gate. Mr. Chang shall
deliver the remaining 30% of the outstanding shares of IPA BVI to
VGE. Mr. Chang will also cause IPA China to be a wholly-owned
subsidiary of IPA BVI including obtaining all governmental
approvals required for such transfer.
The company and VGE's obligations to consummate the Second Closing
is conditioned upon, among other things, the transfer of the
equity of IPA China from Mr. Chang to IPA BVI and the execution of
the assignment of the right to grow and harvest fast-growing
proprietary grasses from Quanzhou Keyi Husbandry Breeding and
Planting Co. from China Gate to IPA China.
In the event that the Second Closing does not occur within 240
days after the First Closing, the Purchase Agreement, each
Employment Agreement and the Shareholders Agreement shall
automatically terminate and all stock certificates delivered at
First Closing shall be returned.
If the Second Closing does not occur within 240 days although most
of the company's closing conditions have been satisfied, then Mr.
Chang may receive additional VGE shares or retain the company
shares as: if the VGE stock is listed on a trading market, then
company shall transfer to Mr. Chang all the VGE shares. If the
VGE stock is not listed on a trading market, then Mr. Chang shall
retain the company Shares instead of returning them to the
company.
In the event that the Second Closing fails to occur, neither the
company or its affiliates, or any of their directors or officers,
shall engage in the grass business in China for a period of three
years after the First Closing Date.
During the 75 day period after the First Closing, VGE shall engage
an independent auditor acceptable to Mr. Chang to perform an audit
of the financial records of IPA BVI and IPA China in accordance
with federal securities laws. During the course of the audit, the
independent auditor will determine if a "Cash Shortfall" existed
as of the date of the First Closing. The auditor's determination
shall be binding on Mr. Chang and the company. The "Cash
Shortfall" means the amount equal to $3.0 million less IPA BVI and
IPA China's cash equivalents (which includes all cash plus
accounts receivables less accounts payables), calculated as of the
First Closing Date. Mr. Chang shall pay IPA BVI the amounts of
any Cash Shortfall in cash.
Within 150 days of the First Closing, VGE shall prepare and file
with the Securities and Exchange Commission a registration
statement covering the resale of all or such maximum portion of
VGE common stock issued pursuant to the Purchase Agreement as
permitted by SEC regulations that are not then registered on an
effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. Alternatively, VGE shall
register its common stock on a registration statement on Form 10.
VGE shall use its best efforts to qualify its Common Stock for
quotation on a trading market as soon as practicable, but in no
event later than the 240th day after the closing of this Agreement
or the 90th day after the effectiveness of the Registration
Statement on Form S-1 registering some or all of VGE Common Stock
or on Form 10.
Provided that the Second Closing has occurred, if VGE common stock
is not listed on a trading market within 240 days after the First
Closing, then the company will issue to Mr. Chang the number of
shares of its common stock equivalent to US$5,600,000. The stock
price will be calculated as the average closing price of the
company's common stock during the 60 day period prior to and
including the Second Closing Date. In exchange, Mr. Chang shall
return all shares of VGE common stock it received pursuant to the
Purchase Agreement to the company
China Gate and Mr. Chang each represents and covenants that at
least 100 hectares of arable land in Guangdong province in China
will be available for grass farming by IPA China within 12 months
after the First Closing Date. Any agreement regarding such land
use rights shall grant the land use rights to IPA China, but shall
be assignable to VGE at VGE's option. The term of such agreement,
including possible renewals, shall be at least 10 years.
VGE shall establish a stock option plan and shall reserve
1,400,000 shares of common stock for issuance of options to VGE
management and employees under the Option Plan. Carl Kukkonen
will be the Chief executive Officer of VGE upon the First Closing,
and of IPA BVI and IPA China upon the Second Closing; Stephen Muzi
will be the Chief Financial Officer, Treasurer and Secretary of
VGE upon the First Closing, and of IPA BVI and IPA China upon the
Second Closing. Mr. Chang will be President of IPA BVI and IPA
China upon the First Closing, and of VGE upon the Second Closing.
Wang will be Managing Director of Grass Development of IPA China
upon the First Closing. Mr. Chang shall manage and control the
operations of IPA China and IPA BVI through the Second Closing.
Each of Mr. Chang and China Gate, severally but not jointly,
agrees to indemnify and hold harmless the company and VGE from and
against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable
attorneys' fees, charges and disbursements) incurred by such
VIASPACE Entity as a result of any inaccuracy of the
representations or warranties or breach of covenants by Mr. Chang
or China Gate, respectively, herein.
Each VIASPACE Entity agrees, severally but not jointly, to
indemnify and hold harmless Mr. Chang and China Gate and its
directors, officers, affiliates, agents, employees, consultants,
successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by Mr. Chang and China Gate as a result of
any inaccuracy of the representations or warranties or breach of
covenants by such VIASPACE Entity herein.
As promptly as possible following the Second Closing, IPA BVI and
IPA China shall prepare, and its independent outside auditors. If
the Gross Profit (as defined below) as indicated in the 2008
Financials Statements is less than $1,500,000, then Mr. Chang will
compensate the difference to VGE in cash promptly by depositing
such cash into VGE's bank accounts.
At any time after the First Closing but prior to the Second
Closing, Mr. Chang may request VGE to grant a non-recourse loan to
Mr. Chang of up to $1,500,000. After obtaining such funds from
IPA BVI or IPA China, VGE shall deliver the loan proceeds within
ten (10) days after receipt of any such written request. Interest
on the loan shall accrue at 6% per annum and all principal and
interest shall be due and payable when and if VGE files the
registration statement or the Second Closing occurs, whichever is
first. The loan shall be evidenced by a promissory note to be
made by Mr. Chang in favor of VGE, with such additional terms and
conditions as may be reasonably requested by VGE.
The company paid CBC Consulting ("Finder") and its President, a
finder's fee for services rendered in connection with introducing
IPA China and IPA BVI to the company and facilitating the
acquisition. At first closing, the company delivered to CBC's
President, 10 million shares of common stock, registered under our
registration statement on Form S-8 for services he rendered to the
company. The company also delivered 24,461,538 shares of its
unregistered common stock to CBC. The company will also deliver
to CBC $384,000 in company common stock at the Second Closing
valued at the average closing price during the 60 days period
immediately prior to and including the Second Closing.
Employment Agreements
VGE entered into four separate employment agreements with each of
Carl Kukkonen, Sung Chang, Stephen Muzi and Maclean Wang.
Kukkonen would serve as Chief executive Officer, Mr. Chang as
President, Muzi as Chief Financial Officer and Wang as Managing
Director of Grass Development of IPA China. Kukkonen and Mr.
Chang would receive a salary of $240,000 per annum, Muzi receives
$180,000 per annum and Wang receives $84,000 per annum. Each of
them should are entitled to a bonus as determined by the VGE Board
of Directors, customary insurance and health benefits, 15 days
paid leave per year, and reimbursement for out-of-pocket expenses
in the course of his employment.
Under Mr. Chang's employment agreement, VGE will grant him an
option to purchase the number shares of its common stock equal to
four percent (4%) of VGE's total outstanding shares as of the
Second Closing Date. The purchase price of the option shares
shall be eighty percent (80%) of the fair market value of such
common stock as of the Second Closing Date. The option shall vest
over a period of 24 months beginning on the date of the Employment
Agreement, with 1/24 of the option shares vesting on the first day
of each month that Mr. Chang is employed with VGE.
Under Wang's employment agreement, VGE will grant him an option to
purchase the number shares of its common stock equal to four
percent (4%) of VGE's total outstanding shares as of the Second
Closing Date. The purchase price of the option shares shall be
eighty percent (80%) of the fair market value of such common stock
as of the Second Closing Date. The option shall vest over a
period of 24 months beginning on the date of the Employment
Agreement, with 1/24 of the option shares vesting on the first day
of each month that Wang is employed with VGE.
Each executive shall have an employment term of two years. VGE
may terminate the Employment Agreement for Cause. As used herein,
"Cause" means (a) the refusal in bad faith by executive to carry
out specific written directions of the Board, (b) intentional
fraud or dishonest action by executive in his relations with VGE;
(c) the conviction of executive of any crime involving an act of
significant moral turpitude; (d) any act (or failure to act),
knowingly committed by executive, that is in violation of written
VGE policies, the Employment Agreement or VGE's written agreements
with third parties and that is materially damaging to the business
or reputation of VGE as determined in good faith by the CEO.
Each executive, by notice to VGE, may terminate the Employment
Agreement if a Good Reason exists. "Good Reason" means the
occurrence of any of the following circumstances without
executive's prior express written consent: (a) a material adverse
Mr. Change in the nature of executive's title, duties or
responsibilities with VGE that represents a demotion from his
title, duties or responsibilities as in effect immediately prior
to such Mr. Change; (b) a material breach of the Employment
Agreement by VGE; (c) a failure by VGE to make any payment to
executive when due, unless the payment is not material and is
being contested by VGE, in good faith.
If executive's employment with VGE is terminated without Cause or
for Good Reason, executive shall be entitled to receive all salary
and benefits due to executive during the term of the Employment
Agreement, and all executive's stock options, if any, shall vest
on the date of termination.
If the Second Closing fails to occur within 240 days after the
First Closing, the Employment Agreement shall automatically
terminate and neither party shall owe any obligations whatsoever
to the other party under the Employment Agreement, provided that
VGE shall pay to executive all amounts owing to executive at the
time of termination, including for previously accrued but unpaid
bonuses and expense reimbursements.
Each executive shall not disclose any confidential information of
VGE. During the period commencing upon the date of each Agreement
and terminating three years after termination of employment, no
executive, without the prior written permission of VGE, shall not
for any reason whatsoever, (i) enter into the employment of or
render any services to any person, firm or corporation engaged in
any business which competes with VGE ("Competitive Business");
(ii) engage in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent,
employee, trustee consultant, advisor or in any other relationship
or capacity; (iii) employ, or have or cause any other person or
entity to employ, any person who was employed by VGE at the time
of termination of executive's employment by VGE (other than
Executive's personal secretary and assistant); or (iv) solicit,
interfere with, or endeavor to entice away from VGE, for the
benefit of a Competitive Business, any of its customers.
Shareholder Agreement
Under the Shareholder Agreement by and among the company and Mr.
Chang, VGE shall have 3 directors. The parties agree that two
directors will be selected by the company while one director will
be selected by Mr. Chang. Carl Kukkonen will be the initial
Chairman of the Board and Chief Executive Officer of VGE. Stephen
Muzi will be the initial Chief Financial Officer and Secretary of
the Company. Mr. Chang will be the initial President of VGE,
effective as of the Second Closing.
Carl Kukkonen will be the initial Chief Executive Officer of IPA
BVI and IPA China, effective as of the Second Closing. Stephen
Muzi will be the initial Chief Financial Officer and Secretary of
IPA BVI and IPA China, effective as of the Second Closing. Mr.
Chang will be the initial President of IPA BVI and IPA China (the
"Subsidiaries"). Maclean Wang will be initial Managing Director
of Grass Development of IPA China.
Meetings of each board of directors shall be held at least 4 times
per year, at such places and on such dates as are agreed by the
directors. The presence of any 2 of the directors shall
constitute a quorum for the transaction of business at a meeting
of the board of directors. The affirmative vote of a majority of
the directors present at a meeting will constitute a decision of
the board of directors; provided, however, that decisions as to
Fundamental Matters, as set forth below, shall require unanimous
approval:
-- other than certain permitted issuances, any issuance or
agreement to issue any equity securities of VGE or the
Subsidiaries;
-- any transaction of merger, consolidation, amalgamation,
recapitalization or other form of business combination;
any joint venture; any liquidation, winding up or
dissolution of VGE or the Subsidiaries; or any acquisition
of any business or assets from, or capital stock of, any
person;
-- any sale, conveyance, lease, transfer or other disposition
of any substantial assets or any other transaction not in
the ordinary course of business;
-- any declaration or making of dividend payments or other
payments or distributions made to any shareholders;
-- any amendment or modification of the Memorandum and
Articles of Association;
-- any indebtedness incurred or guaranty made by VGE or the
Subsidiaries or any pledge of VGE's or the Subsidiaries'
assets by VGE or the Subsidiaries;
-- commercial proposals or contracts which would commit VGE
or the Subsidiaries for a total amount of more than
$100,000;
-- decisions relating to the officers and executive
management of VGE or the Subsidiaries, including
compensation, employment and termination of employment;
-- approval of the annual budget of VGE and the Subsidiaries;
-- selection of auditors for VGE and the Subsidiaries.
Each shareholder shall have a right of first refusal of any
attempted sale or transfer of shares of VGE common stock by the
other shareholder except for certain permitted transfers to
related parties. In addition, each shareholder shall have a "tag
along" offer right in which it may include its shares in any
attempted sale of VGE common stock by the other shareholder.
The Shareholder Agreement shall terminate if the Second Closing
fails to occur, or as mutually determined by the parties or upon a
sale of VGE to a third party.
The description of the Securities Purchase Agreement, each
Employment Agreement and the Shareholders Agreement are each
qualified in its entirety by reference to such agreements attached
hereto as Exhibits 10.1 through 10.6.
About Viaspace Inc.
Based in Pasadena, California, VIASPACE Inc. (OTC BB: VSPC)
-- http://www.VIASPACE.com/-- founded in 1998 with the objective
of transforming proven space and defense technologies from NASA
and the Department of Defense into hardware and software solutions
that solve today's complex problems, Viaspace benefits from
important patent and software licenses from Caltech, which manages
NASA's Jet Propulsion Laboratory.
Going Concern Doubt
Goldman Parks Kurland Mohidin LLP, in Encino, California,
expressed substantial doubt about VIASPACE Inc.'s ability to
continue as a going concern after auditing the company's
consolidated financial statements for the year ended Dec. 31,
2007. The auditing firm pointed to the company's recurring
losses from operations, accumulated deficit and shareholders'
deficit at Dec. 31, 2007.
For the three months ended June 30, 2008, the company posted a net
loss of $1,901,000 on revenues of $67,000, compared with a net
loss of $2,102,000 on revenues of $132,000 in the same period in
2007.
WACHOVIA BANK: Fitch Cuts $79 Mil. Class K Notes Rating to 'BB'
---------------------------------------------------------------
Fitch Ratings downgraded Wachovia Bank Commercial Mortgage Trust,
series 2007-C30, commercial mortgage pass-through certificates,
and assigned rating outlooks as:
-- $69.2 million class F to 'A-' from 'A'; Outlook Negative;
-- $98.8 million class G to 'BBB+' from 'A-'; Outlook Negative;
-- $79 million class H to 'BBB-' from 'BBB+'; Outlook Negative;
-- $88.9 million class J to 'BB+' from 'BBB'; Outlook Negative;
and
-- $79 million class K to 'BB' from 'BBB-'; Outlook Negative.
In addition, Fitch affirmed these classes and assigned Rating
Outlooks:
-- $28.2 million class A-1 at 'AAA' Outlook Stable;
-- $100 million class A-2 at 'AAA' Outlook Stable;
-- $908.7 million class A-3 at 'AAA' Outlook Stable;
-- $195.5 million class A-4 at 'AAA' Outlook Stable;
-- $126.9 million class A-PB at 'AAA' Outlook Stable;
-- $1.876 billion class A-5 at 'AAA' Outlook Stable;
-- $2.289 billion class A-1A at 'AAA' Outlook Stable;
-- $540.3 million class A-M at 'AAA' Outlook Stable;
-- $250 million class A-MFL at 'AAA' Outlook Stable;
-- $671.8 million class A-J at 'AAA' Outlook Stable;
-- Interest-only class X-P at 'AAA' Outlook Stable;
-- Interest-only class X-C at 'AAA' Outlook Stable;
-- Interest-only class X-W at 'AAA' Outlook Stable;
-- $49.4 million class B at 'AA+' Outlook Stable;
-- $79 million class C at 'AA' Outlook Stable;
-- $69.2 million class D at 'AA-' Outlook Stable; and
-- $59.3 million class E at 'A+' Outlook Negative.
Fitch does not rate the $39.5 million class L, $19.8 million class
M, $29.6 million class N, $19.8 million class O, $9.9 million
class P, $19.8 million class Q and $98.8 million class S
certificates.
The downgrades of classes F through K are the result of the
lowering of shadow rating on the transaction's largest loan, Peter
Cooper Village and Stuyvesant Town (19%) to below investment
grade, as well as expected losses on loans in special servicing.
The loan, which had a 'BBB-' shadow rating at issuance, is no
longer considered investment grade. At issuance, the loan's
proceeds were allocated to 'BBB-' and above, while they are now
allocated to all classes in the capital structure. This results
in higher credit enhancement requirements. While the current net
cash flow is not sufficient to meet the debt service obligations,
due to the sufficient amount of remaining interest reserves
($161.2 million) and the continued conversion of units to market
rental rates from stabilized rental rates, Fitch does not expect a
default of the loan in the near term.
However, the pace of the unit conversions does not meet
expectations at issuance and rental rates are less likely to
increase given the current economic conditions. Fitch's estimates
of future net cash flow, based on reduced conversion rates and
reduced year-over-year increases to market rental rates, no longer
support an investment grade rating. The borrower, Tishman Speyer
Properties, LP and Blackrock Realty acquired the property with the
intent to convert rent stabilized units to market rents as tenants
vacated the property, resulting in increased rental revenue. As
of June 2008 there are 3,543 market units and 7,210 rent
stabilized units, with vacancy of 4.2%.
Currently there are three loans (0.35%) in special servicing. The
largest specially serviced loan (0.2%) is secured by a retail
center in Pembroke Pines, Florida. In February 2008, CompUSA (42%
of the net rentable area) and Sound Advice (24% of NRA) vacated
the premises, leaving occupancy at 35%. Both companies are
currently being restructured and it is unlikely they will continue
to honor their leases at the center. The trust has hired counsel
and will follow a dual track of workout options and foreclosure.
Losses are expected.
The second largest specially serviced loan (0.1%) is
collateralized by a multifamily property in Milwaukee, Wisconsin.
The loan transferred to the special servicer on Jan. 11, 2008 due
to imminent default. The special servicer has approved a case
authorizing certain capital expenditures, which the receiver is
currently working on. Foreclosure is expected to occur on or
shortly after Nov. 1, 2008. Losses are expected.
The final specially serviced loan (0.1%) is secured by a retail
center in Sandy, Utah. The loan was transferred on Oct. 15, 2008
and limited information is available at this time. Based on
recent appraisal values, losses are possible.
In addition to the Stuyvesant Town loan, there were two other
loans in the top ten, 350 Park Avenue (5.6%), and 485 Lexington
Avenue (4%) that were in the process of stabilizing at issuance.
While the loans continue to have servicer year-end 2007 debt-
service coverage ratios less than 1.0 times, Fitch has reviewed
the updated occupancy, reserve expenditure, and cash flow
information for these loans and has determined that they are in-
line with the stabilization schedule set fourth at issuance.
Fitch will continue to monitor these loans.
The affirmations reflect stable performance and minimal pay down
since issuance. As of the October 2008 distribution date, the
pool's aggregate certificate balance has decreased 0.1% to
$7.896 billion from $7.903 billion at issuance. The weighted
average mortgage coupon for the pool is 5.86%.
The Rating Outlooks reflect the likely direction of any rating
changes over the next one to two years.
Fitch reviewed servicer provided operating statement analysis
reports for the four shadow rated loans: 9 West 57th Street
(1.3%), Concord Square Shopping Center (0.4%), Manor Shopping
Center (0.2%) and Everett Mall Office Park II & III (0.2%).
Performance continues to meet expectations and the loans maintain
their investment grade shadow ratings.
9 West 57th Street (1.3%) is secured by the land underneath a
1,393,200 sf office building at 9 West 57th Street between Fifth
Avenue and Avenue of the Americas in the Plaza District submarket
of Midtown Manhattan. The property benefits from an experienced
sponsor.
Concord Square Shopping Center (0.4%) is a 236,107 sf community
shopping center located in Wilmington, Delaware. Major tenants
include Stop & Shop Supermarket, Borders, Marshalls and CompUSA.
As of June 30, 2008, occupancy has improved to 100% from 98.8% at
issuance.
WACHOVIA BANK: S&P Puts Low-B Ratings on Three Certificate Classes
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class L commercial mortgage pass-through certificates and the
class WA and CM raked certificates from Wachovia Bank Commercial
Mortgage Trust's series 2006-WHALE 7. At the same time, S&P
affirmed its ratings on 20 other classes from this series.
The downgrades reflect Standard & Poor's analysis of the Westin
Aruba, Broadreach Pool, Colonial Mall Myrtle Beach, and Leestown
Square loans, which together represent 8% of the pooled balance.
Current operating performance for these loans does not meet
Standard & Poor's initial expectations, and the loans are
discussed in further detail below. The other eight loans, which
represent 92% of the pooled certificates, are secured by
collateral that is performing at or close to S&P's initial
expectations.
The affirmed ratings reflect Standard & Poor's analysis of the
remaining loans in the pool, as well as increased credit
enhancement levels resulting from loan payoffs.
Details on the four underperforming loans are:
-- Westin Aruba, the fifth-largest loan in the pool, has a
whole-loan balance of $230.0 million that comprises a
$96.7 million senior interest (3.6% of the pooled trust
balance), a $3.3 million subordinate nonpooled component
that provides the sole source of cash flow for the WA
class raked certificates, and a $130.0 million nontrust
junior participation interest. The loan is secured by the
leasehold interest in a 478-room full-service resort in
Palm Beach, Aruba. The subject property was built in 1975
and renovated in 2006. It offers ocean views and is
ranked as a Four Diamond Resort by AAA.
Additionally, the property has a 12,000-sq.-ft. casino and
approximately 19,000 sq. ft. of meeting space. The loan
failed to meet its maturity extension requirements because
it did not satisfy the prescribed loan-to-value and debt
service coverage test. The loan has been extended one
year to April 9, 2009, reflecting a modification of some
of its terms. It has two one-year extension options
remaining. Year-end 2007 occupancy was 68%. Based on
S&P's review of the borrower's 2007 operating statements
and its review of the appraisal dated April 2008, Standard
& Poor's current valuation is 17% below its level at
issuance. The property is currently performing below
S&P's expectations due to a substantial increase in
operating expenses and a low occupancy rate, which it
attributes to a weakened economy and delayed renovation
work. There is also ongoing litigation between the casino
tenant and the borrower.
-- Broadreach Pool, the sixth-largest loan in the pool, has a
whole-loan balance of $148.1 million that comprises a
$71.5 million senior participation (2.7% of the pooled
trust balance), a $4.2 million subordinate nonpooled
component that provides the sole source of cash flow for
the class BP-1 and BP-2 class raked certificates (not
rated), and an $72.3 million nontrust junior participation
interest. The loan is secured by eight Southern
California suburban office properties, one of which is a
flex property, with an aggregate of 914,453 sq. ft. The
loan was originally secured by nine properties; one was
released at 115% of its allocated loan balance. The loan
appears on the servicer's watchlist due to its upcoming
maturity. The loan was extended one year to Aug. 9, 2009,
and has two one-year extension options remaining. Per the
servicer the loan will be removed from the watchlist as of
the remittance report dated November 2008. Occupancy as
of June 2008 was 77.9%. Based on Standard & Poor's review
of the borrower's 2007 operating statements and third-
party reports, S&P's current valuation is 9% below its
level at issuance. The properties are currently
performing below S&P's expectations due to low
occupancies, which it attributes to an increase in tenant
bankruptcies and a weakened economy.
-- Colonial Mall Myrtle Beach, the 11th-largest loan in the
pool, has a whole-loan balance of $50.2 million that
comprises a $35.0 million senior interest (1.3% of the
pooled trust balance), a $1.2 million subordinate
nonpooled component that provides the sole source of cash
flow for the class CM raked certificate, and a
$14.0 million nontrust junior participation
interest. The loan is secured by a 523,415-sq.-ft.
regional mall in Myrtle Beach, South Carolina. The
property was constructed in 1968 and most recently
renovated in 2003. Anchors include JC Penney, Belk, and
Bass Pro Outdoor World. Standard & Poor's valuation of
net cash flow has declined 18% since issuance due to
lower-than-expected rental income and increased expenses.
The subject property was 86.7% occupied as of June 2008.
The loan matures in December 2008 and has two one-year
extension options remaining. The borrower has recently
started conversations with the servicer regarding
extending the loan.
-- Leestown Square, the 12th-largest loan in the pool, has a
whole-loan balance of $31.0 million that comprises a
$19.5 million senior interest (0.7% of the pooled trust
balance) and an $11.5 million nontrust junior
participation interest. The loan is secured by three
class B government-occupied office buildings containing
441,649 sq. ft. in Frankfort, Kentucky, the state capital.
The subject properties were built in 1950 and renovated in
1995. Standard & Poor's valuation of NCF has declined 34%
since issuance due to large tenant vacancies. The subject
was 72% occupied as of June 2008, which was down from 100%
at the cutoff date. The loan matures in December 2008
with no remaining extension options. The servicer has
been in discussions with the borrower regarding the
pending final maturity.
As of the Oct. 20, 2008, remittance report, pool statistics were:
-- There were 12 loans remaining in the pool.
-- There were mortgages on 14 full-service hotels and 105
limited-service hotels, 12 class B+ office/flex
properties, and one retail property.
-- The payoff of seven loans, as well as the release of five
properties, has reduced the principal trust balance by 8%
to $2.6 billion.
In addition to the aforementioned loans, Wachovia reported three
additional loans on its watchlist; details of these loans are:
-- The largest loan on the servicer's watchlist and the
third-largest loan in the pool, 1515 Broadway, is on the
master servicer's watchlist due to its upcoming maturity
on Nov. 9, 2008. The servicer has indicated they are in
the final stages of approving the extension, which would
extend the loan to Nov. 9, 2009. There will be one one-
year extension remaining after the extension is granted.
The loan has a whole-loan balance of $425.0 million that
comprises two pari passu pieces: a $212.5 million senior
interest (8% of the pooled trust balance) and a
$212.5 million senior loan that was included in the LBFR
2006-LLF C5 transaction. The loan is secured by a 53-
story class A office building in New York with an
aggregate net rentable area of approximately 1,715,207
sq. ft.
-- Jameson Inns Pool, the fourth-largest loan in the pool, is
on the master servicer's watchlist due to its upcoming
maturity. The loan has since been extended one year to
Aug. 9, 2009, and has two one-year extension options
remaining. Per the servicer, the loan will be removed
from the watchlist as of the remittance report dated
November 2008. The loan has a $172.9 million trust and
whole-loan balance that makes up 6% of the pooled trust
balance.
In addition, there is a $160.0 million mezzanine loan
secured by a pledge of the equity interest of the
borrower. The loan is secured by the fee interest in
100 properties, fee and leasehold interest in one
property, and the leasehold interest in four properties of
a pool containing 105 limited-service hotels and 6,868
rooms. The loan was originally secured by 107 properties;
two properties were released in 2007 at 105% of their
respective allocated loan balances.
-- Hyatt Regency Islandia, the 10th-largest loan in the pool,
is on the master servicer's watchlist due to its upcoming
maturity in January 2009. The loan has a $65.5 million
whole-loan balance composed of a $36.6 million senior
interest (1.4% of the pooled trust balance) and a
$28.9 million nontrust junior participation interest. The
loan is secured by a 421-room full-service hotel and 186-
slip marina in San Diego, California. The property
recently underwent a $58.6 million ($136,000 per room)
property improvement plan. Renovations were complete as
of March 2008. The loan matures in January 2009 and has
two one-year extension options remaining.
Ratings Lowered
Wachovia Bank Commercial Mortgage Trust
Commercial mortgage pass-through certificates series 2006-WHALE 7
Class To From Credit enhancement
----- -- ---- ------------------
L BB+ BBB- N/A
WA BB+ BBB N/A
CM BB- BB+ N/A
Ratings Affirmed
Wachovia Bank Commercial Mortgage Trust
Commercial mortgage pass-through certificates series 2006-WHALE 7
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 50.45%
A-2 AAA 26.37%
B AA+ 22.23%
C AA 18.25%
D AA 15.02%
E AA- 11.87%
F A+ 8.91%
G A 5.90%
H A- 3.17%
J BBB+ 2.25%
K BBB 1.19%
X-1A AAA N/A
X-1B AAA N/A
KH-1 BBB- N/A
KH-2 BB+ N/A
BH-1 BBB+ N/A
BH-2 BBB N/A
BH-3 BBB- N/A
BH-4 BB+ N/A
WB BB+ N/A
N/A -- Not applicable.
WENDY'S INTERNATIONAL: Moody's Lowers Ratings with Stable Outlook
-----------------------------------------------------------------
Moody's Investors Service lowered the corporate family rating and
probability of default rating of Wendy's International, Inc. to B1
from Ba3. In addition, Moody's lowered the senior unsecured
ratings of Wendy's to B2 (LGD4, 63%) from Ba3 (LGD4, 54%).
Moody's also assigned a Ba1 rating to Wendy's proposed $200
million senior secured revolving credit facility. The outlook is
stable.
Ratings downgraded are:
-- Corporate family rating lowered to B1 from Ba3
-- Probability of default rating lowered to B1 from Ba3
-- Senior unsecured note ratings lowered to B2 (LGD4, 63%) from
Ba3 (LGD4, 54%)
Ratings assigned:
-- Proposed $200 million senior secured revolving credit
facility rated Ba1 (LGD1, 9%).
The outlook is stable.
The downgrade of Wendy's CFR to B1 from Ba3 reflects the company's
weaker than expected operating performance and debt protection
measures as a deteriorating consumer environment, cost inflation,
and competitive pressures continue to weigh heavily on earnings
and margins.
The downgrade of the senior unsecured notes to B2 from Ba3
reflects the downgrade of the company's CFR as well as the
introduction of the $200 million senior secured revolving credit
facility which is secured by all current assets of the company and
as a result is senior to the notes.
The Ba1 rating on Wendy's $200 million senior secured revolving
credit facility reflect the facilities first lien position in the
capital structure as well as the significant amount of liabilities
that are ranked junior to this facility. This provides a
significant cushion for these secured lenders in a distress
situation.
The B1 corporate family rating reflects Wendy's moderately high
leverage and relatively low margins for the current rating,
adequate liquidity, strong brand recognition, and relatively
stable revenue stream provided by its franchised focused business
model. However, Wendy's operating performance is being impacted
by a deteriorating consumer environment, cost inflation, and
competitive pressures that continue to weigh heavily on earnings
and margins.
The stable outlook reflects Moody's view that Wendy's liquidity is
adequate and that the cushion under its financial covenants should
remain more than sufficient. The outlook also reflects debt
protection metrics that are expected to remain reasonable for the
current B1 CFR.
The most recent rating action on Wendy's was the continuation of
the review for possible downgrade on April 24, 2008.
Wendy's International, Inc., owns, operates and franchises quick
service restaurants under the name Wendy's Old Fashion Hamburgers.
The majority of Wendy's 1,465 owned and 5,208 franchised
restaurants located within the U.S. domestic market.
Wendy's, which generated revenues of approximately $2.4 billion
for the twelve month period ending June 30, 2008, is a wholly-
owned subsidiary of Wendy's/Arby's Group Inc. (Wendy's/Arby's).
WORLD HEART: Effects Reverse Stock Split, Begins Nasdaq Trading
--------------------------------------------------------------
World Heart Corporation effected a reverse stock split of
30-to-1 after filing of articles of amendment with Industry
Canada under the Canada Business Corporations Act and commenced
trading on the NASDAQ Capital Market on a post-consolidation
basis on Oct. 28, 2008. The corporation's shareholders approved
the proposal for a reverse stock split at a Special Meeting of
Shareholders held on Oct. 9, 2008, and the board of directors
determined to implement the reverse stock split at a
30-to-1 ratio. Completion of the reverse split is intended to
allow WorldHeart to keep its listing on the NASDAQ Capital Market,
subject to continued compliance with all of the other listing
requirements.
The corporation's common shares began trading on the NASDAQ
Capital Market on a post-consolidation basis or every thirty
common shares of WorldHeart combined into one common share as of
the opening of trading on Oct. 28, 2008, under the symbol
"WHRTD" and under a new CUSIP number 980905400. The symbol
"WHRTD" will remain in effect until Nov. 25, 2008, and
subsequently will resume trading under the symbol "WHRT".
The reverse stock split will not affect the ownership of option
and warrant holders. Upon the exercise of any options or
warrants, resulting shares issued will be issued on a post-
consolidation basis. No scrip or fractional certificates will
be issued in connection with the reverse stock split.
Shareholders who otherwise would be entitled to receive
fractional shares because they hold a number of common shares not
evenly divisible by thirty will not be entitled to cash
compensation and such holders will lose any entitlement to such
fractional shares upon surrender of certificate(s) representing
such shares.
Registered shareholders of WorldHeart who hold existing physical
stock certificates will receive a letter of transmittal from
WorldHeart's transfer agent, CIBC Mellon Trust Company, containing
instructions on how to receive new share certificates.
Shareholders whose certificates are held in "street name" or on
deposit with their brokerage firm will need to take no further
action.
About World Heart Corp.
World Heart Corp. -- http://www.worldheart.com/-- is a
developer of mechanical circulatory support systems. The company
is headquartered in Oakland, Calif. with additional facilities in
Salt Lake City, and Herkenbosch, Netherlands. WorldHeart's
registered office is Ottawa, Ontario, Canada.
World Heart Corp.'s consolidated balance sheet at June 30, 2008,
showed $2,394,260 in total assets and $9,819,747 in total
liabilities, resulting in a $7,425,487 stockholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $1,323,363 in total current assets
available to pay $3,819,747 in total current liabilities.
The company reported a net loss of $3,049,673 on revenue of
$535,534 for the second quarter ended June 30, 2008, versus a net
loss of $4,476,681 on revenue of $848,594 in the comparable period
a year ago.
X-RITE INC: S&P Lifts Credit Rating to 'B' After Debt Repayment
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on X-Rite Inc. to 'B' from 'CCC+' and removed the ratings
from CreditWatch positive. The outlook is stable.
"The rating action follows the Oct. 28 closing of an equity
infusion, debt repayment, and amendments to the credit
agreements," said Standard & Poor's credit analyst Bruce Hyman.
Other issue credit ratings were also raised and taken off
CreditWatch positive, while the recovery rating on the secured
debt issues did not change.
The ratings had been placed on CreditWatch with negative
implications on April 3, 2008, following the company's announced
violation of certain covenants in its credit facilities; after
several intermediate actions the Corporate Credit Rating was
lowered to 'CCC+'. The CreditWatch implications were revised to
positive from developing on Aug. 21, 2008, following the company's
announcement that a group of investors had agreed to buy about
$155 million in new common stock to repay outstanding debt.
"The ratings on Grand Rapids, Michigan-based X-Rite Inc. continue
to reflect its relatively narrow business profile, somewhat high
cost structure, the limitations of its niche markets, and the
challenges of completing the integration of a late-2007
acquisition," Mr. Hyman added. "These factors are partially
offset by a leading position in its markets and relatively high
barriers to entry."
X-Rite has a major share of the $1 billion color management
market, which serves the graphic arts, textile manufacturing, and
automotive refinishing industries. X-Rite had acquired competitor
Amazys in mid-2006, and acquired Pantone, which provided color
reference standards, in late 2007.
The outlook is stable. Marketplace uncertainties are likely to
impede significant reduction in leverage, which could constrain
upside ratings prospects over the next few quarters. Still, to
the extent that the company is able to resume revenue and earnings
growth, leading to a reduction in debt leverage to about 4x,
ratings could be revised upward, possibly by late 2009. The
stable outlook allows room for a moderate decline in
profitability, and debt to EBITDA of less than 6.0x would not
likely lead to a revision of the outlook.
Still, a major decline in market conditions or subpar execution of
the company's new product development plans could result in price
pressures as well as a significant decline in production volumes,
leading to leverage of more than 6x, in which case the outlook
would likely be revised to negative. A significant decline in
liquidity, to less than $50 million, which is also not expected,
could lead to a negative outlook.
X-RITE INCORPORATED: Wants to Register 7,000,000 Shares for Sale
----------------------------------------------------------------
X-Rite Incorporated has filed with the Securities and Exchange
Commission filing a Form S-8 to register 7,000,000 shares of
Common Stock, par value $0.10 per share, including Junior
Participating Preferred Stock purchase rights, with proposed
maximum offering price of $3.25 per share and proposed maximum
aggregate offering price of $22,750,000.
About X-Rite
X-Rite Incorporated (NASDAQ:XRIT) -- http://www.xrite.com/--
including unit Pantone Inc., develops, manufactures, markets and
supports innovative color solutions through measurement systems,
software, color standards and services. X-Rite serves a range of
industries, including printing, packaging, photography, graphic
design, video, automotive, paints, plastics, textiles, dental and
medical.
* * *
As reported in the Troubled Company Reporter on Aug. 27, 2008,
Standard & Poor's Ratings Services revised its CreditWatch on X-
Rite Inc. to positive from developing.
On Aug. 20, 2008, X-Rite Inc. (CCC+/Watch Pos/--) announced that
it had signed a forbearance and new lender agreement and investor
agreements that include a plan to substantially reduce debt,
primarily through the issuance of $155 million in common equity to
new and certain existing shareholders. The agreement also
provides the company with access to up to $10 million on its
revolving credit agreement.
ZVUE CORPORATION: Names Three Directors to Fill Board Vacancies
---------------------------------------------------------------
ZVUE Corporation disclosed in a Securities and Exchange Commission
filing that effective Oct. 24, 2008, Dr. Carl Goldfischer resigned
from its Board of Directors. Dr. Goldfischer's resignation was
not as a result of any disagreement with the company on any matter
relating to its operations, policies or practices.
Effective Oct. 24, 2008, the Board appointed Mart Bailey, Jason
Lyons, and Mark Mansfield as additional directors to fill the
vacancy created by the resignation of Mr. Goldfischer, to fill the
other two vacancies on the Board and to bring the company into
compliance with the independent director and audit committee
composition requirements of NASDAQ Rule 4350. Mr. Bailey was
appointed to the Compensation and Audit committees of the Board.
Mr. Lyons was appointed to the Audit and Nominating committees of
the Board. Mr. Mansfield was appointed to the Compensation and
Nominating committees of the Board.
The company believes that each of Messrs. Bailey, Lyons, and
Mansfield are "independent directors" as that term is defined by
NASDAQ Marketplace Rule 4200. The company also believes that they
are able to read and understand fundamental financial statements,
did not participate in the preparation of the financial statements
of the company or any subsidiary during the past three years, and
they meet the requirements of independence set forth in Rule 10A-3
promulgated under the Securities Exchange Act of 1934, as amended.
The Board of Directors also determined that Mr. Lyons qualifies as
an "audit committee financial expert" as defined by the SEC rules
adopted pursuant to the Sarbanes-Oxley Act of 2002, and he
replaces Dr. Goldfischer in that role.
In connection with their service as directors, each of Messrs.
Bailey, Lyons, and Mansfield will receive the company's standard
non-employee director cash and equity compensation. Such
compensation consists of a $20,000 annual retainer for non-
employee directors.
In addition, Messrs. Bailey, Lyons, and Mansfield received an
initial non-employee director stock option grant to purchase
50,000 shares of the company's common stock at an exercise price
per share equal to $0.08 which was the fair market value price per
share of the common stock on the date of grant, which was
Oct. 24, 2008. Such non-employee director options are fully
vested on the date of grant, have a term of ten years and shall
otherwise conform to the Company's standard form of Non-Qualified
Stock Option agreement.
About ZVUE Corp.
Based in San Francisco, ZVUE Corporation (Nasdaq: ZVUE)
-- http://www.zvue.com/-- is a global digital entertainment
company. ZVUE(TM) personal media players are mass-market priced
and currently available for purchase online and in Wal-Mart stores
throughout the U.S.
Going Concern Doubt
Salberg & company, P.A., in Boca Raton, Florida, expressed
substantial doubt about ZVUE Corp.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's net loss of $18,188,833 and net cash used
in operations of $12,156,127 for the year ended Dec. 31, 2007, and
accumulated deficit of $41,218,007 at Dec. 31, 2007.
The company has incurred losses and negative cash flows from
operations and has an accumulated deficit at June 30, 2008, of
$56,897,000. The company posted $8,120,000 in net losses on
$1,737,00 for the quarter ended June 30, 2008.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $5,002,000 in total current assets
available to pay $6,856,000 in total current liabilities.
* BOOK REVIEW: Crafting Solutions for Troubled Businesses:
A Disciplined Approach to Diagnosing and
Confronting Management Challenges
----------------------------------------------------------
Authors: Stephen J. Hopkins and S. Douglas Hopkins
Publisher: Beard Books
Hardcover: 316 pages
List Price: US$74.95
Own your personal copy at
http://www.amazon.com/exec/obidos/ASIN/1587982870/internetbankrupt
Crafting Solutions for Troubled Businesses: A Disciplined Approach
to Diagnosing and Confronting Management Challenges, by Stephen J.
Hopkins and S. Douglas Hopkins, will change the way you think
about the problems of businesses in distress.
The book will be of great value to turnaround management
practitioners, lenders facing loan covenant defaults, Board
Members of struggling companies who need a basis for evaluating
and assisting their management to realistically confront problems,
and private equity firm management facing problems with portfolio
companies or seeking to identify turnaround investment
opportunities.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr.,
Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez,
Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2008. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***